The Ramsey Show - App - It’s Never Too Late to Clean Up a Financial Mess

Episode Date: January 10, 2025

From the Ramsey Network, this is The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm George Kamala, joined by my good, good friend, Dr. John Deloney. Taking your calls at 888-825-5225. You jump in, we'll help you take the right next step with your life, your money, your mental health, your relationships, whatever is going on. Speaking of what's going on. Yeah, before we get going, I think it's important just to let our friends

and colleagues and family members in los angeles just know we see it it's a it's just a disaster man um i'm rarely speechless and just watching some of that footage um i've got friends in the in pepperdine i i just it's just devastating to see so um it's one of those things you feel helpless sitting this far away and you're watching on your TV or watching on your phone. But what we can offer right now is to let people know they're not alone. We see it and our thoughts and we're praying for you guys big time. Yeah, our hearts are with you all. And speaking of which, John, our first call is from California out here. Nitish is with us. What's going on, Nitish?

Hey, folks. Thanks for taking the call. Sure. And I appreciate your sentiments on LA Fire. Right now, I have a question that my wife and I bought a house worth around $2.5 million. And we have another house which is worth around $1.3 million. And we have another house which is worth around 1.3 million.

And it has 500K remaining. We have rented it out. It's around $4,000 per month. So our salary is around $900,000. And Our salary is around $900,000. And yeah, so we were just kind of concerned

whether to kind of keep the rental property or sell it off. The rental is coming like pretty nicely, like it's around $4,500, which is kind of like covering all the mortgages and any other insurance and stuff like that. So I was just wondering what your thought is on that. What is the mortgage on your current home? It's around $2 million.

Okay. So you've got $2.5 million. Do you have any other debt outside of these two mortgages? Just a car loan, maybe $40K. Okay. Well, you're calling us because your plan isn't working as you wanted it to. There's some stress here, and I would feel it. If I was over $2.5 million in debt, regardless of my income and how great things were right now, in the back of my mind, I would be knowing this is a house of cards. It could all come crashing down any minute. Yep. And so you want to reduce risk in your life.

You're using language like, well, it's just a 40K car loan. That's kind of what gets us here, you guys have an just undeniably insane income, and yet what happens is you just go, well, we can acquire more and handle more payments, and it leads us to this place where we have to decide, do we want to keep going down this road, or do we want a more peaceful path? So if I was in your shoes, I'm going to try to reduce that risk. So you have an amazing income. How much extra margin do you have at the end of each month?

So we have around cash coming in, around $25K. After all the 401K savings and everything, we have around $1 million in stock. And around 401K is around another million. Okay, And the stock is non-retirement, right? It's fully vested? Yes. Okay. So you could sell a whole bunch of that and knock out a lot of this debt. You could knock out the car loan instantly and knock out the rental loan instantly and make about, you know, what, a quarter progress on your own mortgage. That's absolutely correct.

My wife and I, like, so my wife kind of feels that the rental is self-paying, so why should we worry about it? Let's just, like, the lenders pay for our mortgage pretty much. And I'm trying to convince, kind of, like, lowering the risk. So I don't know. Do you remember, I don't know if you remember, it was a while ago. There was this thing called COVID and people quit working. And then the local government said they don't have to pay rent and you can't evict them. Yeah.

Remember that? Yep. Yep. I do. So I would assume the mortgage on your rental property is not very safe because you don't ever know. And especially in California with the squatting laws, I mean, y'all have good tenants and God bless you because those tenants can go south in a hurry. And it might be 30 days, 60 days, 90 days, six months, two years. You guys get tied up in court, but the bank doesn't care.

They want to get paid every month. And the other risk is having all this money tied up in a single stock, in a single company. So I like the idea of offloading it for other reasons, other than just getting debt free. My mom worked at this company called Enron that used to do that. Gave everybody a lot of stock. And I had friends who went to bed, millionaires who woke up one morning with zero dollars because all their retirement was in stock in that company. So yeah, man, if you're talking to me and George, our families, our houses, we'd sell that stock and start paying off everything we own, man. I'd much rather have

two tangible assets, two homes I can go see than a company saying, no, no, no, I promise we're worth it. I'd much rather that, man. Okay. And especially you're too rich to be holding a depreciating, a loan on a depreciating asset like a vehicle, man. Okay. Sounds good. So I have some extra like $5,000 per month that I can contribute towards my

mortgage. Do you recommend me putting that into the mortgage too? Yeah. Once the car's paid off, then your next step, if you're filtering this through our Ramsey baby steps, you should be completely consumer debt-free with a fully funded emergency fund, then begin investing 15%. Then any money beyond that can go to kids' college and paying off the mortgage early. Okay. And with your income, I think sit down with your wife, show her, okay, here's where we're at, here's where we could be.

And if we go down this path, we sell the stock, we become debt-free, we free up that rental mortgage payment, we free up a car payment, we have all this extra money, we could tackle our own mortgage and probably be done with that with your income in under five years. Yeah. That's pretty amazing. And how old are you two? We are 39 and 40. Think about that. You're in your mid-40s, and you will have, I'm not even saying sell the rental property.

You could keep it if you're going to knock it out and reduce some of the stress and increase the cash flow. You'd be sitting with about a $4 million net worth of paid-for property in your mid-40s. And a million dollars in your retirement fund. Yeah. So you're worth 5 million bucks free and clear. And here's the thing you have then that you don't have right now. Absolute freedom. Peace. And guess what? Your buddies are going to think this advice is stupid. They're going to be like, you should buy nine more properties

and leverage all the debt and do a HELOC on the first one. That's what's going on out there in the culture, but they don't live your life. They don't pay your bills. They don't know what happens inside your home, what's happening inside your body, how you're feeling about it. And that's where John and I go, we're solving for freedom all day long. And you're in an amazing position where you have a million dollars sitting there in stock. You have about a million dollar income. This problem is pretty easy to solve. But the hard part is the choice and getting your wife aligned on this. I think the new wealth

moving forward in the 21st century, George, is can you fall asleep on your pillow at night? I think the new status of wealth, like Dave used to say, it's not the BMW. I think the new status of wealth is nobody owns me and my family. Me and my family have freedom. We've got peace. And, man, I don't care how little or how big your salary is, solve for that, man.

You change everything in your home. Well said. Thanks for the call, Nate T. It was a good conversation. This is The Ramsey Show. There's a time in your life and in the baby steps for renting, but you don't want to do it forever because when you rent, you're still paying for a mortgage, just somebody else's. Plus, rent means instability in your budget because it always goes up, never down. So when you're

ready to buy, make sure you work with a mortgage partner you can rely on, Churchill Mortgage. Churchill is Ramsey trusted to help you make the move from renting to home ownership wisely. Churchill understands that when you buy a home the Ramsey way, your mortgage payment will be a consistent, manageable part of your monthly budget. Plus, when your home is paid off, that was your largest expense. Now it's extra money in your pocket and an asset towards turning you into a baby steps millionaire. So get started on the American dream of home ownership today at churchhillmortgage.com. That's churchhillmortgage.com.

This is a paid advertisement. NMLS ID 1591. NMLSConsumeraccess.org. Equal housing lender. 1749 Mallory Lane, Suite 100. Brentwood, Tennessee 37027. Welcome back to The Ramsey Show. Open phones at 888-825-5225. Dan is up next in Jacksonville, Florida. What's going on, Dan? Hey, guys.

Thanks so much for taking my call. Can you hear me? Yes. How you doing? Good, man. Good. So my question is, I just got married about two weeks ago to my wife, who was lucky enough to inherit a Roth

from when she was young. And right now it has about 75,000 in it. And all of it is an Apple stock. So I know, I think how you guys are going to feel about that. And then I also have 30,000 in a bond from my grandpa. And I guess my question was just how to best go about just investing that and what using it for, whether it put it towards the mortgage or if we're saving up for a car or just kind of how to best utilize those funds. Yeah. So what you said, is it a Roth IRA, the Apple stock? It is, yep. Okay. And then you got $30,000 in a bond. And what is your next financial goal?

As you guys look at this new marriage, do you guys have any debt you're looking to clear? Yeah, we have about $8,000 right now on a credit card that was originally hers, and we're looking to knock that out real soon. We just got a bunch of money from the wedding, so that's kind of what we plan on doing. So it should be debt-free and honestly honestly, in the next week or so. Awesome. And then how much do you guys have in savings for an emergency fund? Right now, about $19,000. Well, just knock out the credit card today. What are we doing?

Yeah, no, you're 100% right, and after hearing that, I definitely think we will. Make a declaration in front of America, Dan. You're going to do it today. Yeah. That leaves 11K in your savings plus this 30K bond. That's plenty. That should be more than six months of expenses for you guys, right? Of course. Oh yeah, definitely. And then you have a house together? We do, yep. So I think there's about 165 left on the mortgage. So I think the next big goal would honestly just be to get that knocked out as soon as possible. Yeah. So you could use that.

I mean, I know there's some, you know, required distributions from that IRA, I believe, with the new Secure 2.0 Act law. So I would look into that and see when you need to deplete that account by. Okay. But you could use part of that money to knock out the mortgage. You could use future income and just let that money to knock out the mortgage you could use future income and just let that money ride and continue growing for you but i would use any money beyond your emergency fund to start knocking out that mortgage okay can you take george can you take um the distribution the mandatory distribution and turn on and buy a new roth with it

yeah you couldn't do your own investing just flip it around and do it again so i would sell the apple stock and be in a more diversified investment fund. Like you were saying, hey, Apple is a great company. I used to work there. I had some Apple stock. There's worse companies you could have invested in over the last several decades, but I still would sleep better at night knowing that was in a broad-based index fund that had a lot of Apple in it, but it wasn't 100% Apple. Right. So I would do that either way, and it's up to you what you want to use those funds for.

Okay. All right, perfect. How old are you two? So I just turned 26, and she is going to turn 30 next month. Amazing. You guys are going to knock this mortgage out fast. What's your combined income now? Right now, combined, and obviously this is super recent, but combined right now is about, like, give or take 90. Okay.

Great. Well, debt-free, making 90 grand with a $165,000 mortgage, you guys are going to be completely debt-free within, my guess, is three to four years if you do this the right way. Wow. Yeah, that would be amazing. What about by your 30th birthday? You guys have no mortgage.

Yeah, that would be something, man. That would be awesome. It's not something. It's just a choice you make today. You get what I'm saying? It sounds cool, but then you're like,'re like crap i gotta put extra on the mortgage every single month without fail consistently right can i do that and then here's what y'all will do y'all will figure out the the romance the sex and intimacy the dates the fun y'all will figure out your life over the next four years and how to have fun and laughter and joy and friends over and potlucks

and whatever and then you're gonna suddenly find yourself with no mortgage four years in and then the whole world opens up you get what i'm saying like i think a lot of times people go crazy the first two years they put everything on the credit card they go bananas they buy all the fancy stuff and then they realize oh we spent a lot of time on external stuff and we didn't take the time to have to do the hard work internally. You guys, if y'all flip that around and you're just intentional, like we're not going to have any money because we're going to put all in the mortgage and we're going to make a run at this thing. Dude, that would rule. Dude, no mortgage at 30. I can't

even wrap my head around that, man. Yeah. And this inherited money, that's just leapfrogging you. So I'm going to use that to create a legacy for my own family. Yeah, no, it's definitely lucky. So, but yeah, no, that'll be the goal. So I like that by 30. So that'll be the goal. That's it, man. That kind of goal and that kind of intentionality, you start to get your new wife excited about that. You guys are aligned with money. Like John said, you can stop talking about money. You can do more fun things with your life than have money fights. So we're rooting for you, dude. Awesome. Congrats. You could do things instead of money fights.

That's what it's all about. Luis, let's talk to Luis in Medford, Oregon up next. What's going on, Luis? Hey, guys. Nice to meet you guys. How are you? We're doing great. How can we help today? Yeah, so I'm 24 years old, married. My wife is also 24. Our household income is about 90 to 100K a year. About eight months ago, I started hearing about your show. Immediately, we went debt-free. It was a no-brainer. Now we have an emergency fund and we are currently renting and in the process of getting money for a down payment for a house. So the question is,

what advice would you guys give us as first-time homebuyers? Should we save 20% down, 20% down payment, or should we do an FHA loan, conventional? What would you guys recommend? Great question. I'll give you the Ramsey parameters and we can dive into your situation after that. We recommend at least 5% to 10% down for a first-time homeowner and only choose a 15 year fixed rate conventional loan where the payment is no more than a quarter of your take-home pay. And I know once you crunch these numbers, Louise, you're going to go, oh my gosh, these guys are out of touch. How could anyone do that? We can't change the laws of math. So a lot of people go, well, I guess it'll just be 60% of my take-home pay going toward this mortgage and I'll be stressed forever. And so that might mean you need to choose a different house,

choose a different location, choose a townhome instead of a single family home, save up a bigger down payment. So knowing all that, where do you guys stand financially? What's your goal? We would want to get like a single house family, like three bedroom, two bath, something like that. We always have family over. And what is a reasonable home in the area you want for those parameters? What's that going to cost? We're looking around $400,000. Okay. And how much do you guys plan to have down?

That's kind of the goal that I'm trying to set. I'm fine with waiting until we get 20%, but if you guys recommend 15, 10 or something before, we can pull the trigger as well. Well, I think based on the mortgage payment with the current market and rates where they're at, I think that's going to be a hefty mortgage payment that you guys won't be able to stomach. That might be 70% of your take-home pay. So it's not as much of a down, how much down, five or 10. It's, we might need to save up 30% down in order to make this mortgage work for us, which means we need to get our income up and we need to rent for another two years. So those are, that's the kind of sacrifices you'll need to start

looking at. Are we willing to compromise? Are we willing to do a three-bedroom townhome that's the kind of sacrifices you'll need to start looking at. Are we willing to compromise? Are we willing to do a three-bed rookie mistake of buying an $85,000 work truck. It paid off, but if you don't mind asking a second question, should I sell that truck and buy a $34,000 truck, and then that would speed up the process? Yes, absolutely. If you can do your job with a $30,000 truck. Sell it today. Got it. Today. Yes. Get rid of that thing, dude. $80,000. It's not like if you get double the truck, you're going to make double the money, right? That's not

how business works. You know that. So I would definitely make the sacrifices needed. And if that means downsizing and truck I'm doing, if that means working overtime for the next six months to get this down payment going, I'm going to do that. So you guys decide, you can pull all the levers you want, but don't take any shortcuts doing these first-time home buyer, 0% down type loans. They're not in your favor, my friend. This is The Ramsey Show. For free tools and resources to help you reach your home goals, go to ramseysolutions.com slash real estate or click the link in the show notes. Hey, George Campbell here with a not so fun fact. Every American social security number, including our children's, has been hacked and is now on the dark web. And this is not a scare tactic. This isn't fear mongering. It's a reality that could turn into a nightmare for a lot of

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So get enrolled today by calling 800-356-4282 or just visit zander.com. That's Z-A-N-D-E-R.com. Welcome back to The Ramsey Show. I'm George Campbell, joined by Dr. John Deloney. The phone number to call is 888-825-5225. Well, there's a lot that goes into buying and selling your home, and all of those decisions can feel overwhelming, and you shouldn't have to do it alone. And that's why we created Ramsey's Real Estate Homebase. It's a place with all the tools and resources you need to get prepared to buy or sell your home with confidence. You're going to find calculators, start to finish guides, how-to articles, a podcast, a book, and even a video course, all packed with actionable steps to help you navigate this process. So if you're ready to take those steps toward your home goals

with peace of mind, go to ramseysolutions.com slash real estate, or click the link in the show notes and description if you're listening on YouTube or podcast. Cindy's up next in Fort Worth, Texas. How can we help, Cindy? Yes, hi. Me and my husband are reading your Total Money Makeover book, and we are trying to get serious about getting out of debt. But we currently have about $300,000 worth of debt, and we're just really struggling to make minimum payments on credit card, let alone save up the $1,000 emergency fund. Wow. Does that include your house?

Yes. Okay. So how much do you owe not including the house? So it's $140,000. Okay. Can you break that down for me? So we've got about $50,000 credit card, $50,000 car loan. That was 75,000. I just sold my car to get out from under that and about $40,000 home equity loan. You got it all. You've collected them all. So hold on, you sold your car, but you still owe 50 on it or does he have a car? Yeah, we're financing three cars and now just two. Okay. Tell me about the other two you're financing. My husband's car is a 2022. We owe about $33,000 on it.

And then my daughter's car is a 2022 Corolla and we owe about $17,000 on that. So we're going to sell both of those in the next 15 days, right? There's a 2022 Corolla, and we owe about $17,000 in that. So we're going to sell both of those in the next 15 days, right? Are we? Yes, I think we are. Y'all are scary, scary broke. If you can't come up with $1,000, then these cars have to go. You guys are, I mean, these cars are robbing you from a different future.

You can get nice cars later. We're not saying you can never have these cars again, but this is part of the issue. You get rid of these car payments, you can breathe again, right? How much do you and your husband make? I think it's about $130,000 a year before taxes bring home probably right around $100,000. Okay. Are you guys doing any investing right now? No. Okay. In our 401k.

What's that? Just in our 401k. Well, that counts as investing. That's investing, yeah. So if you took that down to zero, that would put some money back in your paycheck every month, right? Yes. Okay. So that's a start.

You can reshop all of your insurance. You can go to ramseysolutions.com slash checkup and do a coverage checkup, reshop it all because you might be able to save some big money every single month just by reshopping insurance. And on top of that, can you guys work extra, either of you? Yes. I actually just picked up a Saturday job. Good. Good. Do you feel the compounding effect of what a few of these things stacked on top of each other would do for you? Yes. Just getting rid of my car this past Monday, we are going to be saving $1,031 a month. Boom. Wow. So there's your $1,000 right there, right?

Yep. Absolutely. So you'll have $1,000. And then what are these car payments that are left, what do they add up to each month? Let's see, $1,259 a month. So think about that. If you sold the cars and downsized to just something you can get you to A to B, you'd be saving an extra $1,200. You freed up $2,200 just by getting rid of some cars. Like after taxes and take them, you just added a $40,000 a year income to your house. Yeah.

Right? So let me ask you this. You guys have $160,000 of your income to your house. Yeah. Right. So let me ask you this. You guys have $160,000 left on your mortgage. You got 140 grand in debt. Y'all make $130,000. That tells me that y'all, because y'all don't have, I know it feels like it, you don't have a ton of debt. And I mean, you got car notes, you got credit card debt, you'll have a lot of debt, but you also make good money. This tells me you guys go out to eat all the time, your daughter's a princess. Like, do you all spend recklessly?

Do you all not have a budget? We definitely have a budget. There was some time that we got a little bit out of control. We have two teenagers, but we have reeled all that in. Okay. I think one of the greatest gifts you could give your teenagers is to sit down with them and say, here's how mom and dad have lived

and here's how things are going to be different. And we're going to take your precious Corolla and I know you love it, but we're going to sell it because it's the right thing to do. You're the worst. I can't believe you. But I'm telling you right now,

the 27 year old her, the 40 year old her will remember this moment as my mom and dad did whatever it took to become free. Yeah. And I think it will be a watershed moment for you and your family. Okay. And it will really, really not be fun. Not fun at all.

But when you explain to them, like, you guys won't have to take care of us in retirement because we made these sacrifices now. And a 16-year-old doesn't care. She wants her cool Corolla right now. You know what I mean? She didn't care. Especially with the crummy car you're going to have to buy her

or that she's going to have to go to work for. Right. Yes. So there's a lot of sacrifice to be made here, but this is a very hopeful situation because these cars we can kind of undo a little bit. I don't know what they're worth. Do not just go trade them into some dealership that gives you bottom dollar. Sell them private party, clean them up, take some good picks, put it on Facebook Marketplace and Craigslist and get top dollar for these cars so that you're not underwater on them.

Okay. And I'm hoping because they're pretty new, you can still, most of the equity is still inside of them versus being underwater. Especially the Corolla. Mine wasn't even trade. They paid it off and then my daughter's is. My husband's is not.

He would be upside down. That's fine. Go to a local credit union and take out the difference because I'd rather you be $5,000 in debt and then he gets a $2,000 car. I'd rather you all owe $7,000 than owe the $35,000 that you owe now. True. Okay. And remember, this isn't forever.

This might be a two-year journey as you guys clean up all this debt, get to some financial foundation. Then we can save up and pay cash for a car, no problem. Okay. I'm going to ask you a very stereotypical like generalized question that's not fair okay but i'm just a lifelong texan is your husband in enough that he's going to sell his truck and get a seven thousand dollar car uh yeah he would he's all on board that's an that's an amazing good man good for you yeah good for you that's that's fantastic so now you just have hard work ahead of you.

But it's going to clear up way, way faster. On this $50,000 of credit card debt, is it one big credit card or is it 30 just? No, it's two big credit cards. Okay. Did you do some kind of consolidation loan or balance transfer or did you actually max out each card? We maxed out. We were really frivolous on one and the other one, we had everything go wrong in one year and had to put ACs and cars and taxes all on one. Well, from now on, here's what you're going to promise me. We're not going to swipe that

credit card one more time. We're going to be our own bank. And we can make do without it. And if something really goes down where you need more than a thousand to cover it, you'd push pause on all the steps and save up really quickly because you guys have a great income. And that's where freeing up those payments will give you a little bit of breathing room. Right now, you shouldn't get your head above water. So make all the minimum payments on the debts, focus on the smallest one, get the thousand in place, reshop the insurance, pause the investing. And on the smallest one, get the thousand in place, reshop the insurance, pause the investing. And as you start to get more margin, it's going to become addictive. You're going to go, where else can we save? What else can we do? We can cut that subscription. And so I'm going to send you my book, Breaking Free from Broke. And there's a

chapter called Margin is Breathing Room, where I lay out at least 10 ideas to make more, 10 ideas to spend less. My goal for you, just choose a few on each list and you will feel so free just days from now if you do what John and I tell you to do. And I'm going to talk to everybody here, but I'm also talking to you too. Okay, Cindy, I think when you're having to toggle a lifestyle shift with kids, especially teenagers, I want everybody to keep in mind this one word, ownership. How can I invite my teenager, my middle schooler especially, and even my elementary school kid, how can I invite them into the lifestyle changes we're making? That can be, I'm going to teach them about how much money we make, right? And they're going to start doing the budget with us. I'm going

to help, they're going to get to sit in my lap when they're younger and punch the button in. This is what our electric bill is. So when I tell you to help. They're going to get to sit in my lap when they're younger and punch the button in. This is what our electric bill is. So when I tell you to turn the electric like your lights off, this is why. They're going to put the marbles in the jar for every thousand we pay off. But when they feel a part of it, then there's less, oh my gosh, and more

okay, we're all doing this together. And then you get a whole family united in the same direction. Beautifully said. Hang on the line, Cindy. We'll send you a copy of Breaking Free from Broke. Wishing you guys the best. You're going to make it through. This is The Ramsey Show. Rachel, do you ever get these sketchy text messages that are like, hey, you need to update your address and verify so we can get you the package you didn't order? Yes, I have, George. Sketchy and never trust them.

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weird emails, spam calls, all of it. I love it. So you got to be sure to check them out. Ramsey fans get 20% off their annual plans. Just go to joindeleteeme.com slash Ramsey. That comes out to less than nine bucks a month. Super affordable. It's amazing. So again, that's joindeleteeme.com slash Ramsey. Make sure to check it out, you guys. Welcome back to the Ramsey show. I'm George Campbell joined by Dr. John Deloney. As a listener of the Ramsey show, let me ask you a question. Are you staying on track with the baby steps to reach your financial goals? If you're not sure or you want some clarity, take a quick quiz that we created to check your progress and you'll get a personalized plan in minutes just for you. Simply head to the show notes, click on the link titled Are You On Track With The Baby Steps and complete the free quiz. Kyle's up next in Portland, Oregon. What's going on, Kyle? Hey, crew. Thanks for taking my call. Sure. My main question is regarding my student loan. So I have a pretty substantial student loan amount. It's $250,000. And so I work for a nonprofit. My main question is, should I pursue that 10-year public service loan forgiveness, or should I just kind of

tackle it and go head on and just try and pay it off? Are you a doctor or an attorney? So I'm a doctor, a pharmacist. So my gross annual is about $170,000. My take home is about $120,000 after taxes. Oregon has some pretty insane income taxes. Yeah, that's why we live in Tennessee. That was a dig. I love Oregon. I think Oregon's a stunning place. Let me ask you this. What's the market rate for a pharmacist?

If you quit there and went over to Walgreens or quit there and went over to a local hospital, what would that do to your salary? So I would make definitely a lot less. So I work for kind of a healthcare giant. I'm sure if I said the name, you guys would recognize it automatically. So I make probably the best hourly and the benefits are phenomenal in terms of how much I pay a year in healthcare and how much I pay for like their match is pretty good as well. Oh, so you're working at like a hospital, but technically it's nonprofit. Exactly. it's a not-for-profit hospital system okay

all right so you're saying you wouldn't make more going into the private sector uh no i would not i'd run primate class okay so my dude my i mean here's what i just saw firsthand and i after the like biden's gonna forgive it all. And then it didn't. And then Supreme court, like after all that, I've, I'm going to be honest with you. I've stopped watching the news ticker on it every day. Okay. But what I witnessed was some of the most brilliant, extraordinary law students of mine decide to go into public service because of this 10 year repayment program. And they got hosed. It just

got denied. They went all the way through it and then a thing happened or they went from one, from working as a public defender to working on a non-profit and they reset the clock. I mean, just crazy stuff that makes no sense and it really soured me on it. And so what I would tell you is 10 years from now is two and a half presidential elections. If you think you can predict what's going to happen in 10 years from now, best of luck to you, right? So what I would tell you is for your soul, you make $175,000. And I know you get beat up on taxes, but you make $175,000. And you could probably pick up saturday and sunday work i would hit the gas in an insane way over the next 18 months and

just pay the sucker down as fast as i possibly could that's what i would do that's what i just watched some of the brightest minds like you just get burned alive by a governmental promise that didn't come through. Shocker. Awesome. I appreciate it, guys. I'll give you some stats, too. So my wife and I, we own a home. We've been in it for about a couple years now. We have a four-year-old son, and we actually have a baby girl due in May.

So we're really excited. Awesome. Congratulations. Yeah, so we've been working on the debt snowball. This is step number two. So we actually paid off our first medical bill today, which is $1,300, which has been nagging. So we're making some huge changes in terms of how we spend. It's actually showing, um, but should we keep snowballing? Because like, we are still able to continue snowballing while working, um, to save for our baby. So, um, like, should I just, how much do you have in savings? So we just have about $1,500 in our starter emergency fund right now. We have about $150,000 in retirement accounts.

Are you guys still investing right now? We're still investing right now, yes. Okay. I would recommend pausing that down to zero for a short time to knock out these debts faster. And I would also recommend pausing to stack up cash. I know you can snowball while saving, but the, I mean, May is not that far away. Four or five months of stacking cash.

I hope everything goes perfectly. Mom and baby are home safe. Great. Let's hit play and we have a bunch of money to throw into the snowball and we'll continue on. Okay. We call that stork mode in the baby steps. When you're in that baby step one through three world,

it's okay to pause and just stack up cash. And by the way, everyone you work with is going to tell you that's the stupidest thing they've ever heard. They're going to tell you, dude, you're missing out on the 2% or 4% match. Are you an idiot? Those guys are morons. And here's what you're going to have that they don't.

You're going to have $25,000 in cash in the bank as your wife heads into labor or thirty thousand bucks in cash and you're gonna be able to sleep at night yeah and none of your colleagues have that they've got a bunch of like cool things on a tin key and cool things like like they're like what cool things like, like they're at, like what, I don't know what they have. I'm just being a jerk, but like,

but you're going to be able to sleep at night. And then the day after the birth and the mom's mom's doing awesome. Baby's doing great. Not day after, but the week or two afterwards, you can take that money and you're just going to roll it back where it needs to go. Okay.

And suddenly that loan is going to be $225,000. Cause you're going to have just dropped $25,000 on it and knock it down. So I'm not anti the PSLF program, but again, the stats are... I absolutely love the idea. As a taxpayer? Yeah, I'm happy to support that. You get some of the brightest minds in the world to go actually solve some of these governmental nonsensical issues.

Dude, I love the idea. Taxpayer, I love the idea of taking some of the brightest minds and saying you work for the government for half or a quarter of your market rate i'm happily pay back your student loans yeah but those kids get screwed it's a half a percent is what was actually approved from september 2020 through june 2023 four million were processed, 19,000 resulted in forgiveness. It was a half a percent. Yeah. So I think the program itself

has a lot of flaws. I'm not mad at it. And I also think devoting 10 years of your life to this and kind of putting yourself in some golden handcuffs here, because now there's a sunk cost. You're three years in,

you have a terrible boss, the workplace changes, and you go, I've got to get out. But man, it's going to ruin my chances. Or some AI thing comes out, and somebody calls you, and they're like, hey, we'd like you to come work with our new pharmaceutical thing. It's going to be amazing. And you're like, oh, I can't do that because I'm seven years into this 10-year repayment. Just get it out of your life, man.

That's tough. Get out of your life. Get out of your life. All right. Let's go out to Crystal in Dallas, Texas up next. How can we help, Crystal? Hey there. So my question for you is, I'm a single mom of three. I do have a mortgage, and then I have $25,000 cash in the bank. I have $25,000 on. Um, my annual income is $90,000. And so I'm just

trying to figure out, you know, I feel safer having that cash sitting in the bank, right? Because I'm a single mom of three kids. And if I were to lose my job or, you know, something happened, that's kind of my safety net. So I'm just trying to figure out, should I put some or all of those funds towards paying off the debt that I have or leave it sit in the bank? This is a tough one. You do have a lot on your plate. And I would argue that there's also risk and it's unsafe to owe that lender. They could repo your car if you don't make the payment. And so there's a piece of me that goes, if you knocked out the 6,000 debt, leaves you with 21. If you took 15 or 20 of that and threw it at the car loan, you're done

with this car loan within a few months, making 90K, right? You freed up a payment from your other debt. So this is not a, you're going to go a year with a thousand bucks in the bank. We're talking about maybe three months, and then you're going to restack it with no payments in the world and get there really fast. Okay. But that's the kind of fire when you feel that thousand bucks in the bank and you feel unsafe, that's when you go, I'm going to kick it into high gear. I'm going to do whatever it takes to get rid of this debt fast to get to that financial foundation. And if you flip it around, if you were to lose your job and you have this pile of cash, all those lenders are still calling you the next day. Right. So you still,

it's six and a half dozen another. You could spread it out, right? You could pay some a little bit, but you're still going to have to pay that money. I would rather, I mean, just sitting here, this is me. I'm not a single mom with three kids.

And so it's much easier for me to say this when I look at my own risk profile, but I would rather owe nobody and get laid off and figure out what's next than have a whole, have a small pocket of money this when I look at my own risk profile, but I would rather owe nobody and get laid off and figure out what's next than have a small pocket of money, but have a whole bunch of creditors that are going to come knocking on the door when I got no job. That's just me. I test the waters, pay off that first debt, see how it feels. I think you're going to go, all right, we can do this. You're going to feel the progress. This is The Ramsey Network, this is The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I'm George Campbell, joined by Dr. John Bologna,

and we're taking your calls at 888-825-5225. You jump into the conversation and let us know what's going on in your world, and we'll try to give you the right next step. Henry's going to kick us off in Raleigh, North Carolina. What's going on, Henry? Hey, how are you? Good. How can we help? So, I'm kind of lost financially. I'm not really too sure what to do. I'm in a good spot, but I'd like to see if

y'all are in my shoes. How would you, what would you do in the future coming up? All right, lay it out. So me and my wife previously had a home. Then we, we actually just moved back in with my dad. He's not charged us anything. He just wants us to save money. I currently have $14,000 in my bank account. We got a little surprised when we moved in, and my wife is now six months pregnant. So, yeah, I don't really know if I should just keep saving and then buy a home. some people were telling me to buy a trailer, some people were telling me to buy a home. I'm not really too sure. All I'm doing is just putting money in my checking account, and I don't really know what direction to go. How much debt do you have?

I don't have any. I actually just paid all mine off. Awesome. So you're at BabySep 3. You're saving up a fully funded emergency fund. What does three to six months of expenses look like for you guys? Obviously, it's tough now because you're basing it off of zero rent, living with dad. But what would it be? Well, right now, the only thing we really have is my wife got a new car about six months ago. Is there a payment on it?

Yeah, it's about that. Henry. That's debt, homie. We've got to start off this relationship with honesty. I asked if you were debt-free. Well, I'm thinking of me. She put it in her name. She did all of it herself.

No, y'all are y'all. Any money she owes, you owe. Was this against your will, or were you an accomplice in the crime? Well, see, I work a lot. Like, I work on call, so I was one of those I was on call working, and she said she was going to go look at cars and then kind of... Snuck away to the dealership and showed up with what? How much was this car?

$32,000. And what do you guys make a year? So I make $ 21.50. She makes 19 an hour. Okay. So you guys are making, I'm going to just ballpark it and say you guys are making about 80K a year? Yeah, about there. Okay.

So in our world, just... John's at a loss for words. Yeah, it's rare. My wife and I, I just can't wrap my head around any successful marriage I know. The partner would not go make a $30,000. Dave and Sharon Ramsey, they're worth $700 million, would not make a $30,000 purchase without telling the other person. Well, she told me she was looking at them, and then, I mean, yeah. I know, but here's the deal.

In our world, we call that financial infidelity. And I want you to consider it being that serious of a thing. Because you have cash in the bank. You're worried enough about your future finances that you moved home with your wife to live with your dad, right? Back to your high school house. You have the burden that most men don't fully understand until their wife tells them, hey, I'm pregnant, right? And now suddenly it's like you're under a squat rack

and someone just put two more 45s on each side. You're like, whoa, this is heavy. That's the thing I'm worried about. So every week I've been doing a lot of overtime. So I've been slowly building up, buying diapers, buying things to be prepared. It's just- Yeah, don't do any of that. Don't do any of that. Don't do any of that. And again, that's you anxiously spinning out. Okay. Okay. You and your wife have to get united on how much do we owe? We're going to share a bank account. There's not your money and my money.

It's our money. We're creating a home, a family. We made a human together, for God's sake. And so we're going to share everything from this point forward, including our dreams, including our value systems. And that's where the hard conversation like hey we can't have a marriage where one person just rolls off and buys a i mean for god's i i texted my wife when she knew i was at guitar center buying guitar i let her know i'm gonna get one and then she sends me like a rolly

eye face but it's in the budget like you know what i mean it's just she's annoyed by it but it is but i wouldn't even do that like with a small purchase like that and so i but it speaks to a larger unity and you've got one of you buying cars doing whatever and then you're up there like like hoarding diapers right yeah and so that just gets to this unity um let's be on the same page and let's work together towards a common thing. And that may be the first time either of y'all have ever seen that in your lives. And so it's new and we can help you with that, man. But do you get what I'm saying, how peaceful that would be? So let this new baby be a reset and say, hey, I've done a bad job leading our family when it comes to finances.

Don't make it about her and her mistakes. And like John would say, use I language. I want us to be on the same page moving forward because I want us to create an amazing home that maybe neither of us had growing up because I don't want our kid to ever have to move back in with us. Gotcha. Yeah, I can definitely do that. My next question would be, how would we get out of it? Because, I mean, it's 15% APR, 740 miles. Holy smokes bro what's what's left on the loan i came i'm sorry what's left on the loan well the principal is 32 936 so she did she put nothing down i get we put four grand down oh so this car actually cost $36,000, $37,000. Yeah. What's it worth? $26,000?

Yeah, when we were looking at it just to sell it, I mean, I'm probably paying about $4,000 or $5,000 just to get rid of it now. Do it. Pay it right now. Pay it right now, bro. What's your car worth? So I don't even, I have a spare vehicle, but it actually broke down, but I don't have another vehicle. So you guys are one car family. Yeah. I don't have to drive. I don't have to drive. I have a company vehicle, so I don't have to drive, you know, a personal vehicle to get to

work. Got it. So that, that helps us out a lot. I would look at what the private party value is and try to get top dollar for this and be as little upside down as possible. And then use whatever in your savings to cover the difference to clear the title. And then they'll get you a $4,000 used car right now to get out of this mess. Because then you can start stacking up. I imagine the payment on this thing is massive. What are you paying monthly? With insurance, it's almost $1,000 a month.

Golly, dude. that is a lie man i almost had a stroke when i saw it yeah yeah no wonder she didn't tell you goodness gracious um has she seen so let's let's let's be i want to be compassionate has she seen that was dumb yeah now oh yeah now she's trying to figure out what we can do okay because now she's on the same page because before i wanted to just buy a cheap beater yes absolutely she did so i that's all i've ever done i've never owned a brand new vehicle myself yeah so that's why you have no debt and fourteen thousand dollars in a bank account but yeah you know what i mean you haven't made some uh car dealership wealthy by paying the depreciation

on their vehicle for them. Yep. So your job is not to convince her that she needs to sell her car because she made a giant mistake. Your job is to give her a vision for what the future is going to look like. And a byproduct of that is we got to sell the car.

That's a different conversation. And so we're going to go take out a loan for the difference or we're going to save up five grand real fast. Or you got 14 grand. You're going to go sell that thing private party and you're going to be upside down on it you're going to write the other 4 000 bucks and you're going to be done but then this baby's going to come into the world debt free with a fully funded emergency fund building for the future instead of paying for the past and don't buy a trailer go get an apartment that y'all can rent y'all can

save up for a down payment on your own small starter yeah i'm gonna say thanks dad i gotta go get my own place and we'll figure it out. This is the Ramsey show. What does the future hold for business? Ask nine experts and you'll get 10 different answers. Economic growth or a recession. Business taxes will go up or down. AI will help us work or it will replace us all. But there's no such thing as a crystal ball. That's why more than 40,000 businesses have future-proofed themselves with NetSuite by Oracle, the number one cloud

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Check out the show notes. All right, Lucas is in my home state, Worcester. What's going on, Lucas? Not too bad, not too bad. Enjoying some of the cold weather because I'm a skier, but not too excited that there's not too much snow here yet. Oh, wow. Nashville might be beating you for once.

Yeah, we got plenty of snow today. We got like five or six inches today. Probably, probably. But, yeah, no, it's a good day, and honestly, it's a good year. I mean, we've got some good resolutions, and hopefully, you know, being on the call today, hopefully you can give me some advice because I'm trying to find some peace of mind over here. Yeah, what's the question? Yeah, so the question really is like, you know, I'm getting married this year to a beautiful woman and, you know, we're God willing, we're in a great position to, you know, to get married,

buy a house, build a house, part of our goals, you know, but we're faced with some challenges at the moment. And the challenges are really like, we're not able to find land that's kind of like in our price range. You know, homes are just, you know, very expensive in general if we wanted to go down the route of building a home, you know, and then we're also faced with the challenge of becoming further from our, from our family, our friends, our church family, our communities, you know,

to find that nice price that's fitting that fits into our budget. So really the question is like, should we keep like continuously saving? Cause we're not, we're not in debt. We're, we have a budget. We've spoken to some of the financial advisors and whatnot. We're in a good spot, but the thing is should we keep saving and wait for affordable land that's kind of in our budget?

You know, we're kind of looking for the, we're looking somewhere in the central mass area. Or should we, you know, buckle up and consider like buying one of these homes that are on the market when it seems like those really expensive ones and the ones that are kind of like fixer uppers are all at the same price. Let me free you from two things. Number one, let's assume there will not be magic affordable land anytime soon. And number two, let's assume there's no such thing as a dream home. And so instead, if you go, all right, I'm a newlywed looking to get my very first home, it doesn't need to be the 30-year dream, but I need to get my foot in the door.

And so that can free you to go, all right, we're not going to go buy land and do this dream home right now. We're going to go buy a single family in an established neighborhood with some good schools at a reasonable price. That still is too expensive. It's because I'm angry at how expensive the housing market is. I know. I wish we could all go back in time. But we can't. So instead we go, all right, how much do you guys have saved right now for the down payment? How much do you guys have saved? So we have right now saved a little bit over 200K. Wow. That's amazing. First off, I want to, if my parents are listening, I just want

to say thank you to them because without them, you know, it's, they really helped, you know, you know, they really helped me save some of the money and also my fiancée. Well, what really they did is they modeled it for you. They modeled what it looks like to live on less than you make. So that's awesome. Thank God they did. Yeah. So we're ready to put a down payment.

In details of a down payment, I have no idea, to be honest. Okay. What does a reasonable home cost in the area that you would like to live right now? Not the dream land, but just, hey, this is near family, it's in a good area. Is it half a million? Yeah, I would probably say around there, or even 400, 400,000. Okay, so you could put 50% down today and have a $200,000 mortgage, and your household income is what?

Household income a month is around $10,000. Great. So you guys are taking home about $120,000 a year? Correct. Okay. So now your next step is jump on the Ramsey Solutions Mortgage Calculator and go, all right, our 15 year with $200,000 down on a $400,000 house, the payment's going to be, you know, $2,500. Great. That's a quarter of our take-home pay. Let's go ahead. This is a great home. Let's do it. I wouldn't overthink it to the point where you wait seven years to buy perfect land.

Yeah, I think that's the issue, though. That's the thing. I mean, we're very much like we've got this money, we've got this vision, and we want to just build something that we want first off the bat, but we're battling that idea of buying something or just winning. Are there existing neighborhoods with new builds where you could have it, you know, somewhat custom for you? Not necessarily. We're looking, I think, we're very unique.

We're looking for something very specific. We're looking for a nice little overlook of an area of land and some kind of good acres of land, probably good five acres of land. You come from the Deloney lineage. Exactly. John loves nothing, but he's just, give me all the acres you got. Okay, so Lucas, here's a thing you need to make peace with, okay? Yeah, yeah, yeah. You have a dream um and you've worked towards that dream so here's what you've done you've made choices yeah what you're not doing

is choosing to have peace with your choices yeah i agree with that you're the guy that got married and continues to talk to all his old ex-girlfriends. Like it doesn't own the gravity of the reality of I made a choice. I picked her. And so you guys right now as a family, I mean, as a couple, y'all have picked a house on five acres. And that means y'all aren't there yet financially. Great. Make peace with it.

Be frustrated and be annoyed. But what you're doing is you're making yourself crazy and so and what i want you to see is that you're making a choice to be miserable now if y'all want to go back to the well one morning one saturday morning over pancakes and the sun's out and it's cold and y'all like hey let's read let's swipe the table clean with this five acre dream and let's like if we had to go right now, is that still our dream? Great. It's awesome. And maybe y'all are like, you know what?

We don't need five acres. We can go play at the public parks, dude. We want to get a house. Let's get a house right now. Okay. But right now, you're working really hard towards a dream. You're way ahead of the curve. Most Americans don't have $250,000 in an account somewhere.

Yeah. So I want you to focus not on the curve. Most Americans don't have $250,000 in an account somewhere. Yeah. So I want you to focus not on the scarcity, on what we don't have. Bro, you are on your way. You're in the.00001% of people. Yeah, be frustrated that it's so expensive to buy land. That's annoying. And you still can't afford a million dollar piece of property.

And I'm not going to choose misery. Now with $200,000 in the bank. Yeah. You know what I mean? Yeah, go ahead. I was going to say, if you want to change your values, change your values. But right now, your value is we want five acres. And I love that. That's me and my family too.

And I'll tell you, after three or four years, my wife wanted something crazy like cell signal. And she wanted to live in a society. Yeah, like water to always come out of the faucets. And we turned it on. Right. And so who knows what's going to happen in four or five years? Or land is really a fun idea until you have two or three kids and going to the grocery store takes an hour and a half round trip.

Or dropping them off at school is a two-hour round trip. Right, yeah. So all I have to say is, dude, I'll be in pursuit of acres until I don't live anymore. I love that dream and vision. And if that's for y'all, awesome. Just don't choose misery today because y'all are doing great, man. How old are you guys? Yeah, that's what it is.

We're in our late 20s. Awesome. You've run out of time, man. Come on. Dude, you're so far out of the game. I know. But think about it. If you guys got a normal house now in a normal neighborhood,

and you get it paid off in your early 30s, probably by the time you guys are 30, you'll have this thing paid off, knowing how intense you guys are. Then we start stacking up cash on top of that. We can sell it. We can get the land on top of that. Who knows? Your income's only going to go up from here. Obviously, you two are. Then we start stacking up cash on top of that. We can sell it. We can get the land on top of that. Who knows? Your income's only going to go up from here.

Obviously, you two are sharp. You're going to be newlyweds combining income. You're going to start off your marriage debt-free with $200,000 in the bank. I'd be grateful, and I would take my chips home from the gambling table and go, we did real well. Let's go ahead and get a house. Or you can rent a house. Once a year,

you and your wife can go stay at a farm somewhere for an obnoxious week and then keep the dream alive. Right? And then when you got the money, you got the money and you go get your place, man. But let's don't choose misery today by just sitting there fretting and Googling and checking Zillow every five minutes. Like, don't make yourself bananas. Maybe there's a secret listing I haven't found yet.

Yeah, get a dollar amount and work your butt off to get that. I'd rather see you working instead of Googling, right? Don't choose misery. Hey, you guys. I'm not a fan of the big banks, and you probably already know which ones I mean. But I do like credit unions because they're nonprofit organizations that focus on their members. And I'm proud to endorse Fairwinds Credit Union because they share the Ramsey mission of helping people get out of debt and live generously. In fact, they design products to help keep you from going into debt in the first place.

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and savings account bundle they created just for Ramsey fans to help you take control of your finances. That's fairwinds, F-A-I-R-W-I-N-D-S dot org slash Ramsey. Welcome back to the Ramsey Show. I'm George Camel, joined by Dr. John Deloney. Open phones at 888-825-5225. Our question of the day is brought to you by YRefi. YRefi refinances defaulted private student loans and builds a custom loan based on your ability to pay. You'll have a payment you can afford with a low fixed interest rate you couldn't get anywhere else to help you stick to your budget and work that debt snowball. Go to YRefy.com slash Ramsey. That's Y-R-E-F-Y.com slash Ramsey. May not be available in all states. Today's question comes from Wanda in South Dakota. Wanda writes,

My 71-year-old husband had to retire last year due to a stroke. He's okay now, but not able to work. He was self-employed and did not have a 401 or a pension. We have to live off what we were able to save, which is about $320,000. I'm 67 and got out of the stock market a few years ago because I couldn't sleep at night worrying about whether the market was going to tank. Whew. All right, so they have a... Can I just say this? Like, this is... Wanda's years. Whew. All right. So they have a... Can I just say this? Like, this is... Wanda's scared.

Yeah. And also, it's not as bad as... Like, they're in better shape than many of the calls that we get. Yeah, they have a fixed income of $3,600, and they have $320,000 that I think is just sitting in cash right now in the bank. That's what it looks like.

But they have no liabilities. They paid off their house, right? And so all of that at least lets me go, whew, okay. This is where I do a budget with my husband and go, okay, we have $3,600 coming in. Here's all of our bills. Do we have money left over

or are we in the red every month? We take property taxes. We're going to divide by 12. That's a monthly bill we're going to put aside. Put it in a sinking fund line item in the budget so that you have that money ready come 12 months from now. That's right. Now, as far as the money goes, where to invest it? You said, where can I invest this money? Well, you just told me you got spooked by the stock market tanking. And can I give you some peace here? If the stock market goes to zero, we have much bigger

problems. If every company in America goes bankrupt and is worth $0, that's what would have to happen. So I'm not worried about the stock market tanking. You're going to have to ride some ups and downs, sure. But if you look at the stock market last year, 2024, it was up 24% over your money that got 0% sitting in a bank. And so I'm actually more scared for that money to sit not being in the stock market uh than i am about the market tanking um george just makes me think stock market that she

had a bunch of stocks and maybe i'm just looking at it when i see the word stock and stock markets versus some a mutual fund mutual funds that has hundreds of stocks so that's what you want to focus on is an index fund a broad--based, low-cost index fund. If this money's not in a retirement account, I don't know where it is. I have no clue. But if it's non-retirement, you can just invest it in a taxable brokerage account. And as you need, pull money out of it. And obviously, when the market's down, that's the worst time to pull it out because it's worth the least. But when the market's great, you can pull a little more out and pocket that away in a savings account to cover you for the future months. But it really depends on what your bills

are. If your bills are three grand a month and you're taking in 3,600, breathe easy. You don't need to touch the money. Let it grow. Let it rise. In fact, I would strongly challenge somebody to create a life that is below that $3,600 a month threshold. You get no bills other than you got your utilities, you have your insurance, and then you've got your health insurance, right? Your homeowner's insurance and your health insurance. And your property taxes.

Property taxes, yeah. So I would try to build a world where we did that. Yeah, if you need downsize in-house and get lower property taxes, that might be an option too. Or leave South Dakota. I mean, there's all kinds of options there, but you would suggest just put it in a...

Back in the stock market in an index fund or mutual fund that's it keep it simple let it ride don't touch it unless you need it and let's say the last hundred years historical averages stay right yeah it's 10 to 12 percent then um it'll double every seven years at that point right so when he's 78 you'll have 640 depending on what you pull right um and so in 20 years at 85 it'll be 1.3 million yeah yeah i could live with that yeah it could be all right thanks for the question great great question wanda all right sue is in detroit up next how can we help sue hey guys nice to talk to you i was hoping i could do this a little bit better, but I've got a question for you.

I've been with someone and recently married three years and found out last year that my spouse has not filed taxes for over 20 plus years. Oh, geez. How bad is it? And I'm very, very firm on this. I don't know. Things have been hidden from me. I gave him an ultimatum last year. I said, listen, you've got one year to clear this up, to get started, to reach out, get a payment system going.

I was like, if you talk to them, they're not going to come after you. They'll work with you because I've had it happen before. Um, so a year went by and I found out that the person he was supposedly taking his taxes to and followed an extension with had passed away. I had no idea this person had passed away and come to find out he then admitted he had never taken any information to this person whatsoever. So if behavior is a language, what's he been telling you for the last year? That he's too scared and he's putting that fear over our relationship. That's one way to think of it. I was thinking more him looking at you saying, I would rather be scared and hide than to make my new wife feel safe.

Yeah. Is there kids in this mix? Well, there are five kids. Thankfully, they're from a previous marriage. So I'm not really sure how to proceed with this other than I've been researching and trying to protect myself. Luckily, I've always done married filing singly because it just seemed odd to me that, you know, I'd say, hey, let's let's get our taxes. And he goes, well, I'm going to be a little bit late. You know, you go ahead and do it this way. And I said, OK. And then it finally really just started gnawing at me last year.

And when I found out about that. Is he ready to deal with this? Or is this just you wanting him to? He's not. I want him to, and it's been over a year, and now I'm going to have to make good on my word, which is... Is he ready for his kids to visit him in prison? What's his game plan here? I have no idea.

Just put your head in the sand, I guess, and hope that you've dodged the bullet for 20-plus years. Maybe you'll get lucky a little bit longer, but I can't take that chance. What else is he not honest with you about? This kind of stuff doesn't happen in a vacuum. Probably other debts, his spending, I'm guessing no shared financial life. No, I found out that I had just gotten a job a couple years back with the company I work with, and the salary that he was telling me what it was was actually like $20,000 less annually than what he is actually being paid.

So he's actually making more, and he's using that money for God knows what. Exactly. I don't know what. So have you been through an ugly divorce before? Yes. Okay. I have. So it's really common to find yourself in this situation. And when you go through an ugly divorce before,

especially one that you thought was going to be forever, it's common to look in the mirror and lose trust in you. Like, what did I not see? Why did I not do this sooner? Like all that kind of stuff that comes with it. Right. Blaming myself for not seeing red flags sooner. That's right.

And so I guarantee you that's happening again tenfold this time. Yeah. And I've been. Here I go again. Very, very Dave Ramsey approach. Actually, he introduced it to me back after my last failed marriage, and I've been working really hard to be financially sound. Yeah, but he's a scam artist. He's a scam artist and a liar and doesn't tell the truth.

Yes. And so I've done the mourning of my marriage. I've moved on with that. I've been moving finances to a totally separate institution. We've never had a bank account together. Okay. Anything like that. I just, I don't want my children to be affected by this. I want to buy my house. I rent a house from my mother. Okay. I want to buy it. I want to have that stability so that I can have my grandbabies come here someday. Yeah. And. Have you pulled your credit to see if he's pulled anything in your name? No, he has not. I did check that. Okay, I would freeze that too. Okay. And then you or him, maybe both, need to get in touch with a tax attorney ASAP

and figure out what's the next step. Because this is not going to just go away. They don't just go, well, I guess he doesn't exist anymore. He hasn't paid his taxes. He fled town. They're going to find him. And they may hold you responsible for some of the tax, the joint taxes while y'all were together. So, yeah, I would get a tax attorney, and if he won't,

then you need to go on your own. And I'm sorry that this has happened to you yet again. What a mess. This is The Ramsey Show. I'm George Campbell, joined by Dr. John Deloney. Hey, The Ramsey Show Annual Listener Survey is now live. I know you guys have been clamoring, just waiting for this with bated breath, and it is here. We want to know your favorite parts of the show. Thank goodness, George.

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What's going on, Rick? Hey, guys. How are you? Doing well. What's going on, Rick? Hey guys, how are you? Doing well. What's up, brother? Good, good. Say a question for you. My wife and I are restarting the baby steps and we currently have about five grand in our savings accounts and about 111-ish in debt. 58 of that is mortgage. 18 of that's credit card. 8,600 is a car. And 27 and a half of that would be a home equity loan. My question for you is, should I take that savings down to 1,000, use that four to put towards debt, or how do I go about tackling this? Yeah, the debt snowball. You're going to attack

the smallest debt first. So what is the smallest balance right now out of all those debts? Smallest balance is the car at $8,600 at 1.99%. Are the credit cards, did you do consolidation on those? It's just one credit card. Long story short, half of that is from some medical bills that insurance didn't want to cover, yada, yada, yada. You know how that goes. Okay. But you have an $18,000 balance on one card? Correct. Just one card. So if you threw that at your smallest debt, that's the car loan, that would leave you with $3,600 to go. How quickly could you tackle that while making minimum payments on the rest?

I think we could probably do that pretty good. My wife and I make $160,000 combined and probably bring home like $110,000. Awesome. So you guys have a great income to tackle this, but you're still staring down a mountain. I would separate the mortgage, so take that out when you're looking at this debt snowball. It makes it overwhelming, and that's a baby step six item, so that's going to come later. So that really, I mean, it kind of frees you when you just look at that and you go, all right, we've got some debt, but we make 160 and we got to clean up, you know, 45. All right, we can do

this. And so now your new mission is to figure out how much margin you can throw every month at the next smallest debt. And again, it's going to pick up more snow because of that debt snowball working for you as you free up each payment. how much do you pay a month for that car uh 325 i believe it is so um let's pretend you get paid on the 15th if you took the four thousand dollars from your savings and y'all had four grand because y'all bring home what 10 or 11 grand a month you had four grand left and you ran it and you're done with a car in one month now you've just dumped 325 bucks back in the system okay on top of the money you were already throwing so that's where it happens faster than you think because of that snowball method working

in your favor uh but again that's this is some intentionality if you're throwing you know if you've got 50 grand to pay off and you're on the track to do $4,000 a month, this is going to be a year of sacrifice. Can you all do $4,000 a month? You know what? Well, that's part of it. We'd have to get back to a budget. So honestly, I'm not going to say yes.

I'm going to say yes because I want to, right? But we haven't been on a budget. I'll admit that to you guys. We just kind of fell off. Yeah, but you're bringing home. I've been there. It's fine. You're bringing home like 10K a month thereabouts. Are you doing any investing at all in a 401k or anywhere else? So yeah, through mine, about eight and a half percent gets taken. That's not voluntary. That's through the Wisconsin Retirement System, the WRF. And then I have a 401k and I have a 457b that I have,

and my wife has two Roths as well through her work. Okay. So you guys are doing a lot at once right now, and you're not really seeing a whole lot of progress. So what if just for one year, we said we're going to pause retirement and we're going to come back swinging, investing 15% after that? Okay. I'm going to write this all down here. So pause retirement. So pause retirement. You can reshop your insurance. That can save you big sometimes because you've been overpaying with the same carrier. So reshop it. You can go to ramseysolutions.com slash checkup and do a little coverage checkup there to make sure that you're checking off all the boxes. And then on top of that, now it's okay. What are the other levers

we can pull? Are there any subscriptions we can cut? We're going out to eat. We need to stop that and start meal prepping and being really intentional about our grocery runs. And so once you start doing six or seven things at once, making more, spending less, all of a sudden it's easy to find five grand sitting around in that budget that you were just kind of lazy with. Okay. All right. Yeah. I appreciate it, gentlemen. That was my question. I just wasn't, you know, I'm like everybody, we're always paranoid about money and finances. So that's why we weren't sure what to do with that additional savings we had. So. No, you got it. It's scary. I'm not going to lie, Rick. When you take that down to a thousand,

like your breath is taken away and you realize just how risky of a position you've put yourself in by being in all of this debt. But the good news is you get out faster. Well, and he was saying it there, and I think it's important. You know, like I always tell people, you've got to choose your heart, right? Being 100 pounds overweight is a hard way to live. It's hard. And losing 100 pounds is incredibly hard. So it's not a matter of one's easier or not.

It's just choosing your heart. Similar here. It is terrifying to go to $1,000 in your savings account. Like that's terrifying. It's also terrifying to wake up every single day and know we are 50, 60, 70, $150,000 from multiple different angles.

These guys would take our house. Those guys will take our car. They'll take our insurance. Like, so you're just choosing your fear. Which one do you want to have? You want to have an acute fear of, oh my gosh, we only have a thousand bucks and we got to hustle and get this thing done? Or do you want that grinding, low level hum, that fear that never goes away that you don't even get a say in your own life? Like, man, I'm out. But you're just choosing your fear. Yeah. What's interesting as you were talking, I was thinking about how people tend to go into debt when they're desperate or when times are really good. And they go, well, we'll just take out a HELOC. We'll take out the home equity loan. Yeah, sure. Get the

car payment. We can stomach it with our income. And then they don't make that income anymore. There's a job loss. They would need to move for whatever, for family. And all of a sudden, it gets scary because you realize just how exposed you were that's right what what's the old warren buffett quote when the tide goes out you can tell who's skinny divot yeah who doesn't have any clothes on yeah and so the tide's been i mean you've been submerged in the water with this beautiful income surviving making all your payments and all of a sudden the tide goes out and you go oh my gosh like this is a scary way to live that's's right. We actually had a house of cards situation. And so this is, I'm really proud of Rick because this is the hardest part to get to when you're willing to just burn the chips and go, all right, we got to do it. We're willing

to do whatever it takes. Show me the way. Yes. Those are my favorite calls to take because they're not trying to argue that their plan is working. Yeah. No, I love it when someone's like, okay, what I'm doing is not working help. Right. And that's one of my favorite phone calls to make when I call buddies like about workout programs or nutrition or something. Okay, what I'm doing is not working, help. Right? And that's one of my favorite phone calls to make when I call buddies about workout programs or nutrition or something. Okay, what I'm doing is not working, I need some help. And I love that, man, because that's usually when people can say, alright, I got you.

Instead of arguing with John going, well, my workout plan, this is what I'm doing, here's why I think it could actually work. And they're just watching you going, alright, that's cute. Whenever you're done. Whenever you're ready, we'll be here with a better plan for you. That's right. But that's big. If this is the year you're going, hey, I'm going to get out of debt. I'm going to do things differently. We're here for you. We've got a free live stream coming up on January the 23rd called Take Control of Your Money. It's

completely free, hosted by Dave Ramsey and Jade Warshaw. And maybe you need some new information. You didn't grow up with financial literacy. Maybe you need a little pep in your step. Well, Dave and Jade, they are, I think they're 90% pep DNA wise. And so if you need that, go sign up for our free live stream, ramsaysolutions.com slash live stream. You'll also be entered to win our cash giveaway. Five people win four grand each. Go check it out. Link is in the description. And again, this is it. If you're listening on YouTube or podcast to continue listening to more of the Ramsey show, go download the Ramsey Network app. It's completely free in the app store or use the link in the show notes. We'll see you then. Thank you. From the Ramsey Network, this is The Ramsey Show, where we help people build wealth, do work that they love,

and create amazing relationships. I'm George Campbell, joined by one of my best friends in the whole world, Dr. John Deloney, and we are here to serve you guys. You give us a call at 888-825-5225, and these knuckleheads behind this desk will do our best to give you some decent advice. And remember, as Dave says, the advice is worth what you paid for it. No refunds.

Chris is going to kick us off in Houston, Texas. H-Town! What's up, Chris? How can we help, Chris? So, I'm a recent mechanical engineer grad and I just got my first career in the field, and I just wanted to know a better way in order to meet a budget, try and get these loans paid off, and invest as well. Dude, congratulations, man. Did you graduate at Christmas?

No, I actually last, man. I just recently got the job. Oh, you finally got a job. Congrats. Are you doing engineering work? Yes, sir. Amazing, dude. Congrats, brother. That's awesome.

So what's your salary? My salary is $70,000 before taxes. Okay, so $70,000. And what is your take-home pay every month? What actually ends up in your bank? So when I say I kind of recently just kind of started about eight days ago, so I haven't gotten my official first check. Oh, awesome. Yeah, I did some calculations in accordance to Texas taxes and stuff like that. And every month I'd be taking about $47, $48. Yeah, that sounds about right. Wonderful. Okay, and how much do you have in debt?

70K. Is that all student loans? Yes, sir. Okay. How many student loans are a part of that 70K, if you broke it all out? All of it. One is a personal loan from Sallie Maine, but it was used for student classes. How many individual loans?

Like I had, you know, maybe 11 different loans that added up to the $35,000. So how many individual loans make up the $70,000? Oh, the group's 14. Okay. Awesome. So I love that you're asking this question because I can tell you don't want to mess this up. This is more money than you've ever seen in your life, and you don't want to see it disappear into lifestyle and trying to create some facade,

as cool mechanical engineers tend to do. Yeah. So you have no other debt? You drive a paid-for car? Yes, sir. And where are you living? I'm currently living with family at the moment. Oh, great.

So you have, like, no bills? For the most part, no, sir. I do have a three-year-old, though. Okay. And what does it look like for you to, is there an exit strategy, or is this just, hey, stay as long as you need? It is stay as long as you need, but, of course, like, I got to live my life as well. Yeah.

Bro, if you if you can create a plan george is going to walk you through it if you can create a plan and just take your ego and put it in a box for 12 months you can change your entire family tree no definitely because you're going to be making money and george hit on something does anybody else in your in your household make 70 grand uh no sir okay and my expectation is because of how hard you've worked you're gonna you'll have doubled that in five years okay you're in a great field yes they're not gonna do away with mechanical engineers and so what i want you to do is to just everyone in your life's gonna want money from you they're gonna be like why are in your life is going to want money from you.

They're going to be like, why are you driving this car, Mr. Fancy Job, all that. You're going to have to just keep your head down like you've had to do to get through college, like you had to do to get through high school. You're going to have to keep your head down and just do the next right thing that George is going to lay out a map. And dude, I'm telling you right now, if you will follow this map, you're going to be the first millionaire in your family too. It's not going to be glamorous, but my man, you're going to change everything. And that three-year-old daughter is never going to know the struggles that you knew. Does that sound awesome?

Yes, sir. Dude, I'm so glad you're in our gang, dude. It's awesome, man. Do you have any money in savings? Currently, no. At my last job, I was kind of living check to check for the most part. Okay. So your A1 first goal is a thousand bucks in savings. How quickly can you do that? Two weeks? First paycheck? The first paycheck. Excellent. Boom. So you're going to

put that in a savings account and any money beyond that, you're going to start to put in the snowball. And the crux of this, you ask, how do I create a budget? How do I make a plan for this money? I'm going to gift you every dollar premium. And this is our budgeting tool where you can connect your bank account. And here's the key with this budget. The top is going to be your income. Do you have two checks coming in or one? Two. Two a month. So you're going to list out paycheck number one, $2,350. Paycheck number two, $2,350, right? Yes, sir. So out of that $4,600, now we have to make a plan to live on as little of it as possible. What do we need to cover the bill? So

food, groceries, utilities, if you chip in for anything like that, insurance, all of that. And then at the bottom of that every dollar budget, you're going to see debt. And what you're going to do is list out each individual debt, each of those student loans with the minimum payment needed. And your every dollar budget at the top will tell you, hey, you have $700 left to budget. That's a great problem to have because that's 700 extra dollars you can throw with the debt. You see where I'm going here? Yes, sir. So then your next job is to go, all right, I can do $700. What if I sold stuff? What if I worked extra?

What if I could spend even less? What if I could throw $1,500 extra at this debt, at the smallest debt? Well, you're going to knock it out pretty fast, right? What's the smallest balance out of all those student loans? $1,050. Dude, that's done this month. Can you imagine? You're done this month. Can you imagine? You're done this month.

You got one knocked out. It's going to feel so good. And what happens is, Chris, is you free up a payment. That may have been a $100 payment every month. Well, now you can take that $100 on top of the $1,500 you were throwing and add that to it. And that's how the snowball starts to gain some snow and gain momentum. And so making 70K, you have a sizable debt. I mean, you have 100% of your income in debt. And so this might take you two and a half years to knock out. But what if you could take, while you have no bills,

what if you could throw 40 grand a year at this debt and knock it out in less than two years? Would that be a cool goal? It would be. I need a little more excitement than that, Chris. I'm more pumped than you are. I'm a very nonchalant person. I have at least 100 things running through my mind right now. Well, you're an engineer too, and so you love a process. And that's what's beautiful about the Ramsey baby steps is just following a proven step. It's basic mathematics, right? This was probably the first class you took in college. And so all you need to do is go, how much margin can I throw at the next smallest debt? How much can I do next month?

How much can I do next month? Make it a competition with yourself. You have a very deep why. You've got a kid. You want to start your own life. And there's a lot of life ahead for Chris. And so look, two important things. Number one, if this is me just telling you if I was in your exact same shoes,

and by the way, I graduated college, I moved back to your same town, moved back to Houston, I would do this exact thing. I would do everything I could in my power to suck it up for one year with family. If it's not safe, if it's abusive, if they're leeching on you and trying to take your money, then you've got to get out. You've got to get a small apartment. But I would do everything I could because you can knock out 40 grand and dude, then you have 30,000 bucks left. And then you and your baby girl go get an apartment. Not a nice one. I mean,

not a two bedroom extravagant. You get the nicest apartment you can afford cheaply. And you, that next year you bust that other 30 grand out. And when people ask you for money, say I'm in debt and I'm paying off my debts. I can't help right now. and that next year you bust that other 30 grand out. And when people ask you for money, say, I'm in debt and I'm paying off my debts. I can't help right now. I've prioritized all my giving for the year. Thank you, though. Yeah, and they're going to call you.

So that's the second thing is just let them know, hey, I still owe a bunch of money. I've got to pay off my debts, man. I just don't have it. And yes, I've got a lot coming in, but I've got a ton going out paying for college. And if they keep hassling you, then they're opting out of

relationship with you because they're just trying to use you for your money. And so you're going to have to go find some new friends, make some new connections, but you are on the path. We're going to hook you up with Financial Peace University as well as the EveryDollar app. We got you. You follow this plan and your family tree will look completely different. Proud of you, my man. Congratulations. Welcome back to The Ramsey Show. I'm George Campbell, joined by Dr. John Deloney. Open phones, 888-825-5225.

Noel's up next in Baton Rouge. What's going on, Noel? Hey, Dr. John, George. How are y'all doing? Thanks for having me on the show. We're doing fantastic, my man. What's up? Hey, two-part question. So kind of going through baby step two currently, my wife and I,

and learning a lot about the baby steps and some of the details involved in some of that. So in my retirement account, I'm looking to move my traditional portions over to the Roth that I just switched it to. Really looking at what baby step I should do that in and then how should I do that strategically so I don't get myself into a tax bracket that I don't want to be in. Okay. How much money are we talking in this account? $250,000 right now. $250,000? Yes, sir.

Awesome. Way to go. So what you're talking about, this Roth conversion would be a baby step seven item. And there's a reason. Once you get through out of debt, you've got the emergency fund, you're investing 15%, you get the house paid off, that's when you go, all right, we have extra margin now. We can throw money at this conversion instead of at the mortgage. And so you guys might be a little ways away from that, but we can talk about it, you know, theoretically of the best way to do that.

Obviously, a tax advisor would be a good person to talk to if you're trying to stay under a tax bracket. But the tax brackets, it's not like, you know, if you make $100,000 at 20%, it's not like they're going to charge you 22% on all $101,000. That's not how the tax brackets work. So I want to free you from thinking you're going to have a giant tax bill if you get bumped into another bracket. It doesn't work like that. Okay. So I wouldn't be as concerned with the tax bracket, but I understand wanting to do it strategically to go, should I do all 250 conversion at once,

or should I do it piecemeal? Should I do 50 grand a year for five years? That might be wise, depending on your situation. Yeah, my understanding was I would have to pay the taxes as I moved it over right now. So obviously, I'd have to be able to afford to pay those taxes now. Exactly. But also looking at keeping out of that tax bracket. So I appreciate it. Thanks for the info. Yeah. So once you hit baby step seven, that's when I would look into that and I would reach out to a tax pro to help you understand, hey, here's what this will do to my tax return this

year if I make all of this conversion. And you may decide, hey, I'm going to do it piecemeal, or you may be at a different place in life at that point and go, hey, we can stomach the 50 grand in taxes it's going to cost to do this full conversion so that this money grows tax-free for me. And that's what Dave Ramsey does, and I recommend just doing any future investing. Once you're out of debt and you have the emergency fund, any future investing, just put in the Roth side. Let the traditional side just ride until you hit that baby step seven. Then look into the conversion. Great question, man.

You're crushing it. Quarter million in retirement. I think we're on to something here. You're going to build some serious wealth. James is in San Francisco up next. How can we help, James? Yeah. Hey, guys. Thanks for taking my call. A little bit complicated solution. You guys might think it's a simple solution, but I'm stressing out about it. Recently, back in August, the company I worked for went bankrupt and I was back on the market to look for a new job. And I found one in Pittsburgh, Pennsylvania. And I guess somewhat foolishly, my wife and I decided to build a house out in put, you know, a whole bunch of money down and it'll be finished

in May of this year. But, you know, fast forward to today, I got another job offer. It's somewhat of a dream job back in LA and because, you know, the comp was great and the company's great, so I decided to accept that offer. At the time, I was thinking if I sold the Pittsburgh house once it finishes, I'd probably take a bath on it. Just because it's a brand new construction, I probably overpaid upgrading the options. I figured I'd just rent it out and take advantage of the depreciation and tax benefits as an investment property. But recently I learned about this passive activity loss and I realized that my income is too high and I won't be able to deduct the depreciation and other things relative to that investment property now.

And so it's looking like, you know, with the mortgage interest rates now and what they will be when I close, I'll probably be negative cashflow of about a thousand a month on that property if I do decide to rent it out. So I'm just curious on what you guys think I should do with that property.

I would sell it. Yeah. That's not the fun option. I mean, you might lose a little bit of money, but you're going to gain a lot of peace. I wouldn't recommend being a long-distance landlord. Even if you could do this and you could get some depreciation and get some tax benefits, the juice ain't worth the squeeze. We don't recommend being a long-distance landlord. And the idea is if you lived in L.A., would you buy buy a brand new build in Pittsburgh as an investment? The answer is no.

No. And one thing you mentioned that I want you to get on top of ASAP is you've got worry and you've got stress in your life, but you haven't gone the next step into actually have the new house appraised as is right now. So you're guessing you're going to have lost money. And I want you to know for sure, there's something about naming the dragon, like this is the number that we can begin to craft a plan. And you're clearly a smart guy. Your wife's a smart woman. Like once you know, okay, we're going to take a bath, 30,000 bucks. We'll solve that problem. We'll create a plan around it. It might mean we've got to rent in LA for a little bit or whatever. bucks. We'll solve that problem. We'll create a plan around it. It might mean we got to rent in LA for a little bit or whatever. We have a stupid tax, right? We learned

never again, are we going to move somewhere and build our dream home and then immediately take a new job somewhere? Like all these are choices you've made, right? And so it is what it is, what it is, but you don't even know what the number is yet. And there may be an outside chance that you're worrying about nothing. And so I want to get that data all on paper in a spreadsheet before I start the worry machine up. I have been looking at comps in that neighborhood. And, you know, maybe I could break even on the list price to my purchase price. But after, like, closing fees and realtor fees,

I think I I take a bath about 100 grand. Okay. So you're out 100 grand. Do you have 100 grand to write a check for? So my finance situation is take-home pay, I make about $18,500 a month. Okay. My wife makes about $7,500 a month take home, and we have $200,000 right now.

I guess you could call it in savings. It's in cash. But we also own our home in California. The hope was that when we moved to L.A., we would sell our California home and use that $200,000 also with the equity we've built up in the California home to buy a property in LA. Yeah, so here's the deal. That's not going to happen. And so any sort of energy y'all are spending on what we hoped would happen is a choice to not live in reality. And here's the thing that's so amazing about how our bodies are designed.

When it's faced with a tough situation, a tough road to hoe, and you've got people with you, humans are extraordinarily malleable. They can solve a lot of problems and deal with a lot of heartache. It's when they continue to go back to, yeah, but we really hoped that. We really wanted this. Okay, awesome. It's not going to happen. So the beautiful thing, George and I take calls all the time from all over the planet. Most people in your situation don't have 200 grand in the bank as a cushion to eat this thing. Y'all do. And so you're going to sell your house in California. You have 100 grand left and so be it. So you could sell both of these properties, the Pittsburgh one and the

California one. What would that net you? I have about $800,000 equity in California. And so far to the Pittsburgh builder, I've given them $150,000. Okay. I can't go down towards a down payment. Well, and maybe you call them and say, I'll give you $50,000 to cancel the contract and you all finish the build however you want to. And they can make it a spec home. They make an offer.

Go make an offer on it. They may tell you to go pound sand, but it's worth giving it a shot, right? Yeah, I'd explore my options and see what does the least damage. But listen to this. You are in, you're grieving a picture y'all had, which is we're going to have a million dollars to go put down on a house in LA. So you're only going to have 900 grand, right? Y'all are going to be okay. And you're operating from a position of strength. Call the builder. Say, here's what just happened. I'm moving.

Would you work with me on this deal? I can give you $50,000 in cash right this second, and y'all take over the deal of this house. And again, I don't know how this stuff's structured, but you're in a position of strength. I would start making phone calls like that and see what you can work out. That's a good word. There's a lot of zeros on the end. It takes your breath away, but you guys are in a position of strength. I would start making phone calls like that and see what you can work out. That's a good word. There's a lot of zeros on the end. It takes your breath away, but you guys are in a good spot. You all aren't in a we're going to lose it all situation.

You just maybe made a $100,000 choice to move back to California, and you all got to swallow that one and move on. This is The Ramsey Show. Welcome back to the Ramsey Show. I'm George Campbell, joined by Dr. John Deloney. Open phones at 888-825-5225. Hey, if you missed it, we launched a brand new tour, a new event. Dave Ramsey and Dr. John are hitting the road. They're going to a city near you on the Money and Relationships Tour.

And this is a fun event because you shape the conversation each night. At each stop, you select the conversation each night at each stop you select the topics that matter most to you and they're gonna go for it they're gonna i guess riff this is the closest dave gets to doing improv no yeah um i'm already a little puckered up it's gonna be a it's gonna be a world-class exciting night whatever happens on that stage in that city will never happen again magic moment yes and in a world where everything's on the internet and everything is AI, this will be as real and live as it gets, man. Check it out.

Louisville, Durham, Atlanta, Phoenix, Fort Worth, Kansas City. They're coming to you end of April and to early May. So check out all of the dates, ramsaysolutions.com slash tour and join Dr. John and Dave for the Money and Relationships Tour. If you're tuning in on YouTube or podcast, we'll put the link in the show notes. Christian is up next in San Diego.

How can we help, Christian? Hi. Hi, George. Hi, John. Hey. What's going on? Yeah. So my question is about how to navigate a family situation with hopefully some wisdom and some love.

I've got the love. George will have the wisdom. Good. So this past Christmas, my aunt and uncle asked my younger sister and me to contribute to our grandparents' property tax. And they posed it as a Christmas gift, but it just brought up red flags for us. My sister was just like, no. And I said that I just needed more information, really, like how did they get here,

how do we make sure we're not going to be here in the future, and before I would, like, give money. And so the next day they text and they just said, like, we're sorry for asking you. We shouldn't have asked you that. We were sending our request, basically. And I appreciated that, but I still have my questions. And, you know, I want to make sure my grandparents are being taken care of and

that they're okay. So we asked a few more questions and just found out that they have debts, multiple properties, and then there's a trust. And I guess the crux of why they asked us for money was because of the trust, which they think that we would be beneficiaries of, and that in the future, we are expected to contribute to the property tax for the property that is in this trust. So it's still like a financial obligation expected of us. Yeah, but it would be different because if it's given to you in the trust, it's yours. But this is before we would actually inherit it.

Yeah, then you don't have a financial obligation to something that's not yours. Right. So they're making it seem like there's still going to be a financial obligation. And yeah, I just want to know how to... They're saying, hey, this is going to be yours in the future. And right now it's going to get foreclosed on and taken away if you don't pay. So it's basically you're prepaying for some inheritance. It seems like it. But why don't your grandparents who own these properties, they don't have the money?

I guess not. It's not clear. So we got more information about how much money they make per month and what their expenses are, and it's not clear why their income would not cover all of their expenses. It seems like enough from the outside looking in, but it's like not, I'm not sure. I'm not understanding why. Are your aunt and uncle being cagey about it? Yeah, are they on the take?

Are they taking some of the money to quote unquote help? It feels like it. So my grandfather had a business that was not doing well and it shut. They decided to shut it down. He's, you know, past the age of being able to be out there managing a business, running a business. So they did decide to shut it down. But I believe that there are business debts that potentially they are wrapped up in and like co-signed on. And then maybe they're like business taxes.

And so if that money is coming out of their income, potentially they don't have enough, but I'm, it's just not clear to me. Where's your parents in on this? Well, my mother passed away, which is why they believe we would be inheriting her like third. There's a lot of unknowns here. Have you just talked to your grandparents straight up? I have not.

I've talked to my grandparents, but I have not had. So my grandfather has dementia. Okay. And my grandmother, I could talk to her, but I just want to be respectful. I don't. Well, I mean, you got brought into this. I would say, hey, aunt and uncle, they're talking to me about these property tax debt that I need to be paying. I just need to get some clarity on what's going on here. And they're mentioning this trust and I'm not trying to poke in the business, but this is now my business. And if there's three

or four properties and you need to sell one of them to clear up the taxes, that's what you do. That's what an adult does. And that's what will happen if they pass and they have all these liens against their properties, their estate will have to pay this. Yeah, they'll sell one of them. But if your aunt and uncle are somehow wrapped up in this, which just the way you're talking, it makes me wonder if your uncle took out a loan either with your granddad or right after he closed the business

and he's hung up in some of this money and he like who knows and then i don't know why he would just assume that you're a part of a trust um that somehow you got that's just this whole thing feels so sketchy i would stay out of it and go whatever i get when i get it is what i get that's exactly and if that means it's less property than i would have had if i had paid the tax i'm not getting in the middle of this or right if you got brought into it the other thing you can do is you can tell your uncle i'm going to get a forensic accountant i'm going to pay for somebody to go through this whole thing and and separate it all out because at some point your granddad, does he have a living will? They don't have a living will.

They just have this living trust. Who is involved in the trust? Who's the beneficiary? So they're saying that originally it was the three children. My aunt, my uncle, and then my mom. But my mom passed away. But my mom had a spouse, so I don't know if he would be the beneficiary before it would go to me and my sister as her children, and they

don't know either. Well, who's the trustee? Whose name is on this thing to run? Is it an attorney? My grandparents are the trustees. Okay, so it's your grandmother's the trustee. So we need to talk to her. She's got her faculties, and she'll at least know what's going on here or who to go to to get details. But I wouldn't go through aunt and uncle anymore because, truth, I got trust issues right now just hearing this. I do too.

Like this whole thing grosses me out on your behalf. Right. I agree. So I'd go to grandma, and I'd go to the attorney that set up the trust you know what that would keep aunt and uncle out of it that is it okay for me to ask for the documents absolutely it is um they may not give it to you but you can ask for anything you want but i do here's what i would do i would call the attorney on the trust do you do you know who that might be i do have some information about who that might be? I do have some information about who

that might be. So sometimes because of confidentiality, whether it's an attorney or a therapist, they can hear information one way. They might not be able to communicate back with you. Okay. It just depends on how this thing's structured, who's in the trust, who's on it, all that kind of stuff. But you can call that attorney and say, look, my red flags went up and my aunt and uncle called and wanted me to pay money for this because i might be a beneficiary in this thing and now i'm getting concerned that there's some shady stuff going on with my granddad's old business he's got dementia um can i see what's in the trust can you see if i've got any obligation to this thing if i've got if i'm a beneficiary and it's like, can you walk me through this?

And even if you have to pay him a thousand bucks to take you on as a quote unquote client to help you dig into some of this stuff, that would be worth it. Especially if there's multiple private, I mean, if you're talking a million dollar potential that you're going to get when this whole thing's settles out, I would dig into it a little bit.

I think potentially it's all worthless. Okay. My underlying fear is that this is all going to be a waste because they have a bunch of debt, the properties aren't worth much, and once everything's settled, you get like a 10 grand check for all your trouble dealing with this. I worry that maybe they would owe more than they actually have so we wouldn't get anything but we would just end up paying money for inherit to inherit nothing essentially and you know i don't i care more about them being taken care of than i care about inheriting land or property or anything like like that and i'm with you that's why that. That's why I want a neutral third party or even their attorney, their invested third party.

So their attorney who set this trust up might not even be able to tell you that they're your client, but they can sure listen. And if they find out that their client's about to get ripped off by one of their kids, they can sure as heck step in there and get involved. So that would be my first phone call this afternoon or tomorrow

morning would be to that trust attorney and say, here's what's been happening. My spidey sense says something shady is going on. Can you help? Trust your gut. Yeah. Thanks for the call. This is The Ramsey Show, our scripture of the day. Psalm 9, verse 10. Those who know your name trust in you. For you, Lord, have never forsaken those who seek you. JFK once said, I would rather be accused of breaking precedents than breaking promises. Ooh.

Take that. That's a good line right there. He showed them. Yeah. James prefers to break promises over precedents. We will do it the way we've always done it. John loves breaking the rules. All right. Caden is up next in Denver, Colorado.

What's going on, Caden? Hey, guys. Thanks for taking my phone call. I just had one quick question. I'm hoping to get a little advice on my student loan kind of situation and where to put the money I'm making. I have about $4,000 in student loans for myself, and my wife currently has $30,000 in student loans. But in about a year, that'll be about $42,000 because she's finishing up her master's degree. Have you already taken out those extra $12,000 in loans?

No, we haven't. Can you not? We probably have to. I make about $4,000 a month, and she makes $200 right now a month, or $400 a month right now because she's doing a seasonal job, and so it's really slow in the winter. She needs to make more money if she's going to be taking out $12,000.

There's other jobs that she can do full-time, right? Here's what you're asking us. You're asking us how to bail water out of a bathtub, and your wife is coming in and turning on the faucet? Well, sure. What I, I think what is kind of missing in the equation is that for her master's degree, she has to work a full-time job as an internship and she's not paid for that. That's fair. I had to do that too.

That's fair. I get it. Yeah. I get it. So then in the spring and summer, she'll be making close to two to $3,000 a month. She works as a manager in a golf course here in Denver. Good. Okay, and do you guys have anything in savings?

Now we have about $3,000 in the bank, but we just today had to do a $2,000 car repair. So, yeah, unfortunate, but we need to keep our cars alive. Okay. Well, you guys are in Baby Step 2 you've got a thousand in the bank so your goal is to do this debt snowball and that's why it's kind of flying in the face to be adding debt to it our goal would be hey don't touch the debt you have make minimum payments and try to cash flow her masters to where it's, hey, when does that payment due for her master's? You mean like when does it hit all in all? Yeah, when do they go, hey, you need to write us a check for half or all of this 12K.

Or you get on a payment plan and they'll let you pay it out over the semester. Yeah, they do payment plans that work for the semester. So figure out what that is and go, all right, we need to come up with whatever it is, $1,500 a month. All right, we're making $4,300. Can we live off the difference and cash flow this master's so that once we get to her with a master's degree, we now have $34,000 in debt instead of $46,000. And it might be you guys learning, not learning, but just choosing. We have to live like we're freshmen in college. We have to live like we're freshmen in college. We have to live like we are broke college students,

and that means you're going to work your full-time job, and then you're going to go throw boxes at Walmart at night. You're going to drive on the weekends, and she's going to feel bad because it's her master's degrees, and you're going to look at her and say, I love you, and I'm in this with you, and you'll just have to figure that out. That's the way George and I would suggest you do it because what you're going to be doing, like we said, you're going to be bailing water out of paying off your student loan,

paying off her undergraduate student loan. You're going to be bailing water out of the bathtub with the faucet running. And so I'd much rather you all work really insanely this spring to just shut the faucet off. And then once that's over, then start bailing water. Yeah. This last year we did about $15,000 loans amazing good for you guys so just take that same energy and apply that towards the 12 grand she's about to take out for her last semester of master's degree okay so we had been

paying really aggressively towards mine because mine have a little bit higher uh interest rate um should we just do minimum only on that or try to knock those out while we're paying minimum? I would do minimums and try to cash flow everything. Just let the commitment be, we're not going to take any more debt on. Okay. That's for me in my house, George.

Yeah, that's baby step zero. Quit borrowing money. Once you get there, you can deal with the mess we've made. But right now, you're trying to do two things at once. I'd rather you just focus on avoiding new debt. And then once she's got her master's, what, a year from now? You guys will double your salaries easily, right? And now we can tackle what's left pretty quickly.

I mean, I had $35,000 in debt, and I wasn't making what you guys made. And that took side hustles, sacrificing, and 18 months later, I was debt-free. So I imagine for you guys, it's going to be less than a year. And here's the thing, just to think through, man, just think about your – I wish I had a less dramatic way to say this, but think about your soul. If you work bananas, just bananas this spring, and she takes out a $12,000 student loan, you all take it out together, right?

You're all married. Take it out together for her graduate degree. And you work so hard. And you pay off $12,000. You pay off your $4,000 of your student loan, $8,000 on hers. And the balance, the total balance is the same at the end of the spring.

That's going to be so deflating. I'd rather same at the end of the spring, that's going to be so deflating. I'd rather get to the end of the spring and say, dude, we didn't borrow one penny. We're on the path now. But again, that's just me. That's just me. Y'all can do what you want to do. Yeah, thanks for the call, Caden.

We got Rod up next in Miami. What's going on, Rod? Hey, hi. Hey, Amy. Yeah, we got you. What's going on, Rod? Hey, hi. Hey, Amy. Yeah, we got you. What's up? Okay. Well, I'm trying to get my wife to understand the importance of a financial budget.

I mean, I know we're young, or in our eyes we're young because we're 26, but I'm sorry. I didn't even let you guys talk. Go ahead. No, I'm asking you. How can we help, man? It's your show. We're here to serve you.

So you're trying to get on a budget. You want to help your wife understand the importance of a budget. What is her response to your big presentation? Well, she says that she's on board because what I did was, you know, I heard about you guys a few months ago probably about June of last year and I really ate up the information really well and I was like okay cool like I already have been doing my own budget before I heard about you guys and then from there I just started I was like let me apply this to everything because she has student loans

credit card debt I myself I only have a little bit of debt in credit cards, which is still a problem. But I just want her to see if we focus and actually take the time to knock out these debts, then after that, everything will basically be smooth sailing from there. Yeah. So really the question is, what you've tried to do is say, hey, this budget thing is so awesome and so crucial. Instead, you need to paint a picture and show her the vision of what could and will be, and then the byproduct is, oh, and by the way, to get there, we've got to follow this plan called a budget.

You see how it's a different conversation? It's not, hey, can I show you this cool app that tracks numbers like a spreadsheet? It's, hey, what if we could be completely debt-free and we could do whatever we want five years from now? If you want to stay home with our kid, that's great. If we want to quit jobs and move across the country, we can do that because we have no payments in the world. See, that starts to really paint a picture instead of, hey, can you look at my spreadsheet? Makes sense. hey can you look at my spreadsheet the uh the annoying word i wish wasn't the truth but it is is it's you being vulnerable with your wife i'm supposed to be the tough guy i'm from miami i'm

supposed to come in here and like you know show you my muscles and show you like yeah here's the deal this scares me to death and you might be able to talk about if you're real vulnerable and open hey here's how my dad did it and it was scary growing up in that household growing up here's how your dad did it we both know let's don't do that for our kids yeah and most of the time people will get behind that and like you mentioned rod you've been listening to the show you took in new information that changed your mind and she has not had that opportunity and so you being excited is great but you're coming at her in the room going hey you got to check out this dave stuff and man budgeting is so awesome she needs to experience it for herself and i'm going to gift you financial peace university because i love to see young couples

get on the same page because the earlier you start, there is compound growth, not just for your wealth that you can create together when you're young, but also for your marriage and the quality of that marriage and lessening money fights. Just ask her, hey, will you watch these videos with me? Just watch a lesson. And if she goes, all right, I'm in. Can we watch another lesson? Hey, what are your thoughts? Let's talk about it. That will get her on board more than you saying, we got to get on a budget, babe. Come on. But I'm rooting for you guys. Let's get out of this debt.

Let's show her the vision of what could be. That puts this hour of the Ramsey Show in the books. Thank you to the crew who showed up on a snow day to make this happen. Thank you to my co-host, Dr. John Deloney, for picking me up. You're a real saint in that truck. I've got a grown-up vehicle. Thank you, America, for listening. We'll be back before you know it. Bye.