The Ramsey Show - App - Lump Sum vs. Dollar Cost Averaging (Hour 3)

Episode Date: January 4, 2023

Kristina Ellis & George Kamel answer your questions and discuss: Lump Sum vs. Dollar Cost Averaging, How student loans are a lot like gambling debt, "How do I prepare for college as a 15-year-old?" Avoiding a reverse mortgage. Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Want a plan for your money? Find out where to start: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

Девочка-пай Live from the headquarters of Ramsey Solutions, broadcasting from the Pods Moving and Storage Studio, it's The Ramsey Show, where America hangs out to have a conversation about your life and your money. I'm Ramsey personality, Christina Ellis, joined today by my co-host, George Hamill. Give us a call at 888-825-5225. We'd love to talk to you. First up, we have Tanner calling from St. Louis, Missouri. Hey, Tanner, welcome to the show. Hi, Jordan, Christina. Thanks for taking my call. Hey, thanks for calling. What's up? Hi, I had a quick two-part question.

One question is about how I should start filling up my Roth IRA for 2023, and the second part is about a future home purchase. Love it. How old are you? 20 years old. Amazing. Crushing it already. All right, what's the question? I was wondering on my Roth IRA if I should max it out now in January, or if there's any reason I should spread it out over the course of the year, given that I have the money now to max it out entirely for the year.

Awesome. So you're completely debt-free, fully funded emergency fund, and you've got this money to throw into investing. Yeah. Debt-free, $20,000 emergency fund, about $39,000 in my checking account, about $48,000 in a business account. Oh my goodness. Are you an entrepreneur? 20 years old. This is like you are so far ahead of the game. How did this happen? I started a lawn care business when I was about 15. Just five years ago and here you are. Yep. Oh my goodness. You're my hero. Way to go, dude. That's amazing. Is that where that $39,000 came from or the money in your checking account? Yeah, the $39,000 in the personal and then the $48,000 in the business.

But I want to keep the stuff in the business for now. Yeah. Has that just been something you saved up over the last year or kind of how did that come about? Last couple, last two probably mostly. Okay. So what has kind of made you decide now to want to put it somewhere versus where it's kind of been building slowly? I did my Roth last year of the $6,000 for the 2022 tax season. And then I just am like, might as well start down retirement early while I can and get a jump on everything. Yeah, we love that. So let's talk about this Roth IRA. So what we're talking about here is a lump sum versus dollar cost averaging. And in all of

my research, it's been funny because you kind of get to the end back to where you started, which is we just don't truly know because the market is going to do what the market does. So let me explain what that means. If I, let's say I dollar cost average. Well, if the market falls and then it rises, dollar cost averaging would take advantage of those lower prices of those shares during that time. But if I put the money in and then it rises and falls, lump sum investing would lock in that lower price at the start of the year. And so there's kind of, it just depends on the market. And here's the, a good way to think about it. If you're primarily concerned with minimizing your risk and potential feelings of regret, if you put, let's say you put $6,000 in and all of a sudden two weeks from now it's down to $5,000, that just hurts emotionally

as an investor, doesn't it? Yeah, it does. That's kind of what happened last year because my $6,000 is down to $5,400 and then I put $5,000 in the regular IRA and that's down a couple hundred too. Exactly. So that's a perfect example to describe the feelings. Now, then dollar cost averaging would be a better course of action for you because emotionally you can ride that roller coaster more steadily. You're taking advantage of all the dips and the rises. And so you're kind of averaging that out. And so either way, you're going to be a multimillionaire. And all the research I found, they're going, hey, really, it's negligible.

You might be looking at, you know, one or two percent difference depending on how you did it. Now, if you have the money and you're a long term investor, which you're 20 years old, so you've got a whole lot of time ahead of you. I would just throw it in there and not think about it, not worry about it and just do that every single year. But watching the return one year later is unhelpful because if you've looked at your 401k,

if you're listening right now, in the last year, you're depressed because you're like, I've been putting money in, but it's lower than where I started. How is this possible, right? So that's my answer on that one. It's a choose your own adventure. And if you've got the money to just throw

and not worry about it because you're thinking long-term, then just go ahead and do the lump sum. But I'm also assuming that the rest of that $39,000 has something to do with your next question about the house. Yeah. I currently live at home rent-free, and my current thought is I have so much equipment to store, so an apartment or rental doesn't really fit my situation optimally. My current thought is, do I just save up for a sizable down payment while living at home? Or what would you recommend? Because everything's pretty good here at home. Yeah, my goal would be to, I mean, you've got the entrepreneurial spirit. You clearly have a great financial foundation underneath you. I would say you're ready once you've got that down payment to get a home. And it, you know, maybe it doesn't have to be a single family home.

It could be a townhome. Have you looked at home prices in your area? Not entirely. I need something with like a large garage or a large outbuilding. So nothing probably under $200. Okay. And how much do you have outside of the emergency fund that you would say, I can use this towards a down payment?

Just the $39 and the personal at the moment. I have about a $30,000 paid for a truck and about 43,000 in equipment, but all that's business and stuck in the business for now. Awesome. And what is your income? What are you taking from the business? Let's see, this year I revenueed about $140,000, but only probably $30,000 or $40,000 profit on that. And next year I'll probably revenue about $160,000 probably, but I don't know exactly what profit will be on that. Okay, where is all the revenue going? Are you paying a team, equipment?

No, it all went into equipment for the 2022 season mostly. Okay. So next year though, or this year, you're going to have a lot less expenses. So you can take more of that home, correct? Way less. Exactly. So that would be my goal. Because I bought a truck and a bunch of the mowers last year. Great. So I would set a goal for that down payment, do some research on the homes and say, hey, I really would love 250 is about the price point I'm looking at to get the right home. I want to have at least a 20% down payment. I want the payment to be no more than a quarter of my take-home pay on a 15-year mortgage. What does that look like? And then you can set a real nice hard deadline, a hard goal of, I want to save up $60,000 for that down payment seven months from now or a year from now and then start shopping.

Yeah, that would be pretty possible. I just need to make sure I can make it with tax returns and having zero credit score. Yeah, and you can do that. I've done it. It's called manual underwriting. It's a no score loan. Now, the thing you do need to think about, Tanner, is they will not accept, you know, living at home as a true rental payment. So you might need to go rent somewhere for a year, which you can absolutely afford. You might need to store the equipment, you know, back home with your parents for now, but you're going to need a form of proof that you actually paid rent payments to a landlord or to a company versus your parents. So you can look into those parameters on our website, Churchill Mortgage Suits. They have a great list of what they're looking for when it comes to manual underwriting. So I don't want to steer you wrong here because a lot of people, Christina, just go, well, you said I could do

manual underwriting. But you do need 12 months proof of cell phone bills, utility bills, rent, all of that matters. Right. They do need to have some way to prove that you're reliable. They still are loaning you a significant amount of money. So there is some sort of verification to that. So that's something to think about as you begin this process, but you don't need to go play the credit score game to do this. You're a bright young man.

I mean, this guy could pay cash for a home a few years from now if he wanted to. 20 years old. That is just so, that's so outstanding. And it's just also such a highlight point of, you know, even without a four-year college degree, even without following a certain path, you can be super successful. And you can even do that while you're in college. He's doing way better than your son, Junior, over there getting his underwater basket weaving degree at $100,000 a year.

You don't need to do this. This kid is an amazing, amazing inspiration for so many out there. welcome back to the ramsey show i'm christina ellis joined today by george camel we are taking your calls on your life and your money give us a call at 888-825-5225. All right, Christina, you know I live on the internet. I'm working on my phone addiction this year. It's one of my resolutions. But because of that, I get to see all the great videos on social media before anyone else. And usually they make me angry and they rile me up, but I stumbled across one that made me laugh and brought me a little bit of joy. It a little bit dark but i think you're gonna enjoy it can we play it let's do it all right roll that clip i have thousands of dollars in gambling debt that you would all probably call student loans. But I like to look at that as me betting on myself

and losing. A brilliant comedian. Just perfect timing and delivery and such a beautifully dark analogy about student loans. I couldn't decide whether to laugh or cringe. Well, you're a better person than me.

I immediately laughed. That's just straight up. And it's coming from a comedian. So clearly she doesn't take herself too seriously. But there's also reality to that. Think about this. But then I was like, oh, the student loan companies are like the Vegas casinos. And they're inviting you in with open arms

saying you can win big and she's saying i'm betting on myself and the funny thing is the house always wins don't they the student loan companies always win that's just so sad and also also i know i'm allowed to laugh at that right yes gosh christina live a little live laugh persevere we all know how the saying goes it's funny but it's also so true so it brings me to my next point there's this uh article from yahoo here's the headline get this meet the 30 year old with 110 000 in student debt who chose her jobs in hopes of public service loan forgiveness, but her balance just keeps growing like a fungus. This woman, Kirsten Lane, she's 30 years old and she had undergraduate, graduate degrees, went into a career in the nonprofit sector in theory to get the forgiveness, which in reality

didn't quite work out. The elusive forgiveness. And she says, I never miss a payment, always on time, and yet my balances never go down. I don't understand how people can't see that there's something wrong with this picture. And here's the crazy part. She obviously, I guess, found out this program is riddled with flaws, the Public Student Loan Forgiveness Program. So she paused that strategy for that 10-year program to take a marketing agency job in the private sector with a salary that brings her much closer to the 90 grand the federal government estimated she would need to afford to pay back the debt.

Goodness gracious. Well, and it's interesting too, because she said she went to her dream school counting on forgiveness. So basically like that little carrot that was dangled of forgiveness actually affected which school she chose. And what career she chose.

Right. But she actually went to a more expensive school because she was counting on that forgiveness. When you're like, why does it matter? They're going to forgive it no matter the cost. Until they don't. Until they don't. Well, and that's what's kind of,

obviously, man, this gets me fired up. But it's like, this is what is so scary about this conversation about forgiveness. And all of these students who are going to school, who are looking to go to college, is that now going to make them pick more expensive schools because they think someday they're going to get their loans forgiveness or it's going to be capped. There's income based repayment. So I might as well borrow $300,000 because I'm only going to pay 5% of my salary. If you're out to dinner and a generous person is like, hey guys, I'm covering the dinner, get whatever you want. You're not getting the cheapest thing on the menu, right? You're going to get an appetizer. You're going to get the steak,

maybe some dessert, maybe a cocktail. And that's kind of how it is with these student loans and the forgiveness program. They're just going, I'm going to go to whatever my dream school is, whatever the cost is and the monopoly money. Well, that's for someone else to worry about. And it just doesn't pan out like that in reality. And no one makes the money they thought they would make because by the way, to get the forgiveness, you've got to be in the public sector, which by the way, pays less on average than the private sector. And so you get stuck in these rhythms and she calls it a catch 22 in the article. And she goes on to say, I was paying $300 until the pandemic hit. And I think for three or four years, my balances never went down. They always went up.

Well, and that alone is a bit problematic because with $110,000 balance, paying $300 a month with a balance going up, that means you're just paying interest. You're not really tackling the principle. Well, it must mean the interest is high enough and the payment is low enough that you're not making any progress on that balance. And when I hosted the Borrowed Future podcast series we did, I talked to Terry, who had $15,000 of student loan debt that ballooned up to 60 decades later as life hit her and she struggled and she was suicidal. It was so sad talking to her and hearing her heart going, I was worth more dead than I was alive. That is sad.

And so many people feel this way when it comes to student loans. They're going, I was told that this was going to be the best thing for me. The guidance counselors, the student loan companies, the marketing, it's all saying we are investing in your future. And like that comedian said, I bet on myself and I lost. That's what it feels like when it comes to student loans. Well, and that's kind of the way they sell it too, is it's like, it's good debt. It's good debt. It's how you advance.

It's necessary. Everybody's doing it. It's not. It's just not. This's necessary everybody's doing it it's not and this it's just not this quote from her in the article sums it up the hardest thing is that i trusted in the system that i was told from a very young age was going to be my path to prosperity or a decent not exorbitant but a decent middle class life where i could give back to the community that helped raise me and supported me and that that's and said, it feels like a big broken promise now. And that describes the entire college system, student loan system that we find ourselves in today. And we covered this in depth in the Borrowed Future documentary, which is now

free on YouTube. And Christina, you were featured in that kind of showing the other side of saying, hey, you don't have to go down this path. You can go to college debt-free. It's possible. It is possible. I won over half a million dollars in scholarships. My mom gave me a challenge my freshman year of high school and basically said, you're on your own paying for college. But at the same time, I expect you to go to college and expect you. She's an immigrant from Venezuela. And so she was like, I worked to get this far. Now you got to take the baton further. So how are you going to get scholarships? How are you going to go to school debt-free? And that really encouraged me to start hustling. You know, I did a ton of

volunteer work in high school. I did a ton of extracurricular activities. And then I treated the scholarship application process like a part time job my junior and senior year. And so it is possible, you know, but you've got to take student loan debt off the table. We have to, you know, get it through to students that that's not the way. When there's no debt on the table, when that is not an option, you're going to get creative and find ways. And it's so interesting. People have talked to me and they're like, Christina, you must have been anti-debt when you were in high school. But a bit differently there. So I didn't realize that I could take out student loans. I thought if I didn't have enough cash to pay for college, if I didn't find a way to pay for it, that I couldn't go to school. So that really motivated me to figure out how to win scholarships and to get myself out there. You know, but taking debt off the table, it just really encourages you to be strategic and to figure out different ways. And And you know, something else I'm pretty concerned about over the next year that

I think people need to be really mindful of is there's a lot of changes happening right now with public student loan forgiveness. And this program has already, it's misled a lot of people over the last several years. I think it was like 2% of people who applied for the program actually got their debt forgiveness. There's been some waivers recently. They're saying there's some full things going into effect in June. It's all still TBD. There's a lot kind of out there. So I think it's just important to encourage students to still go to school debt-free.

I mean, this is all the forgiveness stuff, right? It sounds so beautiful. It sounds so attractive. But then you have stories like Kirsten's where she's $110,000 in debt, still waiting to see if it's gonna happen and just getting frustrated. So y'all, you are the solution to your problems.

You can go to school debt-free. You can be strategic. You can win scholarships. You can go to a tuition assistance program. You can go to school debt-free. You can be strategic. You can win scholarships. You can go to a tuition assistance program. You can go to a community college. There are so many ways to get educated that do not involve debt. So take it off the table. There is hope to be found, and it's in the mirror. It's not in the federal government. It's not in the next bill. It's not at the White House. You're not going to find it there. It's right there in the mirror. And this is the year you can start to make progress on that debt, become debt free.

And we want to show you how to do that. I got out of $36,000 of student loan debt. Yeah, you can too, America. You can do this. But it takes deciding that your hope is not going to be found anywhere else but that mirror. You got this. We'll be right back. This is The Ramsey Show. are you sick of planned obsolescence you, when companies make products crappy so you have to buy more of their crappy products?

Well, me too. And it's why I love companies like Grip6. Grip6 is all about quality products meant to last forever. That's why their comfortable, bulk-free belts, slimline wallets, and lightweight wool socks all come with a lifetime warranty and simple returns and exchanges. So check them out at Grip6.com today and get up to 20% off with the promo code RAMSEY. welcome back to the ramsey show well most of you were saying good riddance to last year because it was hard enough just to keep gas in your car and food in your fridge but money's still tight and

you're wondering if 2023 will be any different guys you do not have to live through another year of stress and worry. And that's why I want you to watch Building Wealth in 2023, our free live stream on January 12th, because we want to show you that you can still make progress on your goals, build wealth, and have peace with money, even in this crazy economy. During the event, you'll hear from Dave, Rachel Cruz, George Camel, John Deloney, and Ken Coleman. And we're going to talk about how to set goals and create margins so you can build wealth this year. We're going to have some fun and you're going to leave fired up for 2023. Guys, even if the economy still feels out of control this year, you do not have to.

To register for the free live stream, go to ramseysolutions.com slash wealth. That's ramseysolutions.com slash wealth. These have been fun events, George. I'm looking forward to that. I know, I love a good live stream because you get the in-person crowd, but then there's also hundreds of thousands that will end up watching it. So the impact, the ripple effect

when you do a live stream event, it inspires me to go, wonder what kind of debt's gonna be paid off, what kind of wealth is going to be built because of the stuff they're hearing and the stuff those people are going to do after the event. And it's so cool that it's free. I didn't realize it was free till this morning. And I'm like, these events have sold out all around the country. So the fact that we're doing this and you can just watch it for no cost at all, that's just, that's amazing. You know, Dave wanted to charge mega bucks for it. I said, no, Dave, make it free. He went, all right, fine. I'm holding the line. It was that easy. I got a lot of pull around here.

Thanks for your service, George. Don't miss this one. Totally. This is a great one also to tell your friends and family because they don't have to put in a dime. The only skin in the game they need is to go register at RamseySolutions.com slash wealth and sit there for an hour and be hopefully entertained and inspired. There we go. All right, let's go to the phones. Next up, we have Mike calling from Milwaukee, Wisconsin. Hey, Mike, welcome to the show. Hey, guys, how are you? Good. We're great. How can we help? So I'm 15. And I was just wondering what the best way to research colleges and how much I would need to save up for college. I like the best way to do that. Yeah, Mike, I love that you're calling in at 15 years old. That's wonderful. So tell me, what do you want to do? I'm not 100% sure yet, but probably either

business or law. That's great. And you obviously seem motivated. Where did this motivation come from at 15 years old to call into a live national radio show and ask about college? Yeah. So my mom's been a big fan for like the last couple of years. And I've been listening to you guys for like the last month. That's outstanding. Go mom and go you. Yeah, and I'm curious. I want to formulate my plan for the next couple years. I have a job currently, and I'm bringing money, so I don't want to just have it. I want to save it properly. Absolutely. Well, the time horizon for you to go to college, I would not go investing all of this money and then see the market dip, and all of a sudden you have to pay for college, I would not go investing all of this money and then see the market dip and all of a sudden you have to pay for college and the money's not there. So I think your best bet

at this point is a high yield savings account to just start throwing as much money into that as possible. How much money do you think you could put in every month? Probably like seven, 800. Wow. What are you doing for work? So my main job, I'm part-time cashier, and that brings in like $600 a month. And then I have side hustles that I do. What kind of side hustles? So currently, well, in the summer I mow lawns, but that isn't currently working. And then I do like small home repairs. Wow. And like, and I build like furniture, like Ikea furniture.

These are great skills. You got a real entrepreneurial spirit to you. Is that something you'd ever consider? Because we just talked to a guy who was 20, Tanner, who at 15 years old, your age, started a lawn care business and is crushing it. Yeah. And he doesn't have a degree. So I just want to question the idea that you even need this to go where you want to go. No, so I don't really want to do, I don't really want to be an entrepreneur. I kind of want to be in like business management. Cool. So in your ideal scenario, what does college look like for you? Where are you going? Do you have a dream school? What's kind of your vision at this point? So at this point, I really have no idea. I have no dream school. I just want to research the best way and figure

out how much I would need to save. Okay, that's great. And I'm so excited about this call because I feel like I'm talking to myself at 15 years old. Like, I actually thoroughly enjoyed going to the library and pulling out those big, nerdy college books with like the, you know, 350 best colleges in the country. And I would sit there in the middle of the aisle with that book, just going through every college reading about the details of like, what was the culture like at that school? You know, what's the financial aid like? What are the scholarships like? What are the different options? And what would be a good fit? So it sounds like you're super motivated, and you have a wide open range right now. So I would encourage you to take some time, especially at 15 years old, to do some research. You know, there's great websites, Princeton Review, CapEx, College Data, where you can go online and type in things like, are you looking for a big school or a small school? Are you looking for a certain type of culture? Do you want something in the city? What's the price range? What's their graduation outcomes? Like you can get that

granular and really look into, you know, what colleges you'll be matched with, with certain parameters. So I would encourage you to start there, especially with such a broad horizon and have fun with it. Like I know I feel like I'm sounding so nerdy, but I truly enjoyed that in high school. That was one of my favorite parts of prepping for college was just going, I could go anywhere. Like I could go anywhere. I'm going to have to work for it and get scholarships, but I could go anywhere. And that's an exciting time. Yeah. So that's cool. And then once you once you kind of start narrowing in on, you know, some possibilities, then you can start lining up some college tours so you can get on campus. You can get there in person, you know, start talking to people. Maybe you can monitor a class. You can talk to their financial aid department to see what kind of scholarships they offer. You can see what kind of work you could do when you're on campus. You could get a feel for the culture.

So getting there in person is great. Plus, you show the college that you're interested. And having interest in the college could also open up some doors for you to maybe get a waiver on your application where you can apply for free. It may open up some doors to scholarships in the future. So just having that early interest can really go a long way. Do you have a good guidance counselor at your school? So I am currently homeschooled. Oh, okay.

That's what's up. I don't have a counselor. With an awesome mom. It sounds like mom is the guidance counselor. She sounds fantastic. So I do have people who help, but I don't have a guidance counselor. Hey, you know what?

My mom and I, we were like rocking buddies in this process. My guidance counselor wasn't super proactive. So right now in public schools, the average load of a guidance counselor is 450 to 1. Sounds reasonable. Right? So I definitely encourage parents to be proactive in this process because a lot of times there's just not that time for one-on-one attention with every single student. So it's a great resource if you have a proactive guidance counselor.

And if you don't, then parents get in the ring with your student and help them figure out what they need to do. And Mike, here's one thing to take into account. Don't get emotionally attached to one single school because if that doesn't go through, then all of a sudden your world has crumbled and your plans for the next 20 years are now gone. And so just hold it all loosely. You have so much life ahead of you. And regardless of where you go to school, what happens, Mike is the secret sauce. You are the secret factor to your success and so it really

doesn't matter where you go to school i want you to get further education and business if that's where you want to go and just do it based on where do where did i get scholarships where can i afford to go to finish debt free and what helps me get closer to that dream hey mike did you have another question yeah so i was just wondering the best way to divide my income in savings. Well, I mean, like George said, a high-yield savings account can be good. You can look into ESAs or 529s. I would also just encourage you to understand financial aid. That's just kind of a factor to look into.

If your family is going to qualify for financial aid, look into the parameters with that. I talk about that in my book, How to Graduate Debt-Free, because it may be better for your mom to save it in her name versus your name, because student income and savings is factored differently than parental income, and it can reduce your eligibility quite a bit if it's saved in your name. That's a good call. But even at 800 bucks a month, three years from now, it turns in almost 30 grand. That's a heck of a start, man. Mike, you're rocking it. And I love the fact that you're calling it 15 years old.

Y'all, the earlier you can start thinking about this, the better. You have time to plan and be strategic. This is The Ramsey Show. សូវាប់ពីបានប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្រាប់ពីប្� Welcome back to The Ramsey Show. Our scripture of the day is Proverbs 25, 28. A man without self-control is like a city broken into and left without walls. Our quote comes from Theodore Roosevelt. With self-discipline, most anything is possible. Love it.

I feel that, and that's a good one coming in in January. Self-discipline, self-control, that is what is needed this year. That is what is needed. I love a good proverb, Christina. It's like the best version of Twitter there ever was. You know? So good. Twitter. I don't think I've ever heard proverbs compared to Twitter, but that. You know? So good. Twitter.

I don't think I've ever heard proverbs compared to Twitter, but that's going to stick in my mind now. It's just little tweets of wisdom. Just little wisdom tweets. Which is not what Twitter is if you've been on there lately. There we go. Oh, gosh. Well, let's go to the phones. Next up, we have Janet calling from Sarasota, Florida.

Hey, Janet. Welcome to the show. Hi. How are you? Hey, we're doing well. What's up? I'm calling because, you know, I've become a Nancy Show fan, but I just started listening to him late in life, of course.

I'm 70 years old, and in 98, I purchased my home free and clear clear and it's been that way for 25 years and way to go yeah i know but uh and so i but i was wondering if there were exceptions to what kind of debt a person my age should even entertain because, I mean, I'm not really a fan of debt. I used to have credit cards when my husband passed away about 10 years ago. And now my debt-to-ratio to income is a little bit high, enough for them to mention it to me. My credit is good. I pay my bills on time, and I pay more than the minimum amount.

But I do live on a fixed income, and there's very little relief on that. It's doing no fault of my own. I got disabled in an auto wreck when I was 45. And that's when I got the house. I was actually a little younger, I guess. So, Jaina, how much debt do you have? How much debt do you have right now? I've been a widow twice.

Oh, so sorry. Yeah. That's a lot. That's a lot. I know. And how I got into the credit was it really was a lifesaver for me in many ways. Because if you own a home, and a home is like a child it always needs something and um of course there's nobody to call if your toilet breaks you gotta fix it you know

it's your toilet so you've got some home repairs oh definitely definitely i bought a house that was so inexpensive that it didn't sell on MLS for two years. And I bid on it and I got it. After looking at many, many homes and talking to many, many people who wanted to sell me manufactured home, I had cash. And they just wouldn't take me seriously. Finally, I found an investor who had a home he didn't want. It was just out of the way, out of his beaten path. And he introduced me to it, and I saw it, and I said,

I told him he already knew what I was looking for. And that was back in 98. And he had the characteristics. That's the home you're in now. So what kind of debt do you have, and how much? I owe about $16,000 in credit card debt. Now, that's mostly to the big box stores like Home Depot, Lowe's, Target, and Capital One. So, you know, I mean, these are cards that I would never default on them.

What other debt do you have? I don't have any other debt except the credit card debt. And are you considering taking more debt right now? I only got that in the last eight years or 11 years because I didn't believe in credit. So what is your, you said you had a fixed income. What is your income every month? It's about $1,700 a month. And you don't have a mortgage, but you've got other expenses.

How much do your expenses, what do they add up to each month? Well, including those minimum payments. I usually put 800, around $850 in, um, in another bank for my social security. I don't mix the two banks. And then I pay my bills online out of that. And then there's a few I pay in person, like, um, like I'll pay my phone bill online and my car insurance online, but then I'll go right over to Target. I think we got to stop going to Target, Janet. I think that's part of the problem. We got to stop leaving the house because every time you leave the house, you start swiping the cards, right? Well, I kind of am good about not doing that when I want to be.

What happened? What happened? You said about eight years ago you didn't believe in credit before that, and then you started using credit cards. What shifted? My husband died, and he left me with all the bills and only a fourth of the income. He had a business that I couldn't run, and I just had to

have some kind of liquidity what are these house repairs going to cost you Janet do you know well that's a good one which ones have to be done not the ones that are nice to have but what do you have to have done my kitchens have done

my bathroom is totally a Oprah Winfrey bottle show uh bathroom you know is it time to get out of that house is it time to just sell it and no no now let me explain that my taxes are under there's just around 100 a year because i've been here 25 years and i bought a really cheap house and i can only raise your taxes 3% over the year per year, so I'm locked in. I cannot buy another house with this quality. So what are the repairs going to cost?

Have you got an estimate from a handyman, a contractor? Well, I actually have a handyman on site that does all the small stuff. But the contractor stuff, like i need a new electrical panel i need a roof eventually my roof's 19 years old i paid for it myself i put on a 3200 roof in 2003 and it's been through three category fours and it's done really well i'm really impressed with the guy's work, but he's no longer around here. He's more of an independent. Do you have any savings or anything in a 401k?

No, that's the thing that I think I'm not doing one of the baby steps, I'm sure, because I have like $7 in the bank most of the time or 15 cents, depending on what that month is. So no retirement accounts, nothing you could sell, any extra vehicles, anything to create some money for you? I have some things I could sell, but it's a matter of, like my husband's vehicle, when he passed, I couldn't get what I, they only wanted to give me $800 and I said, no, I wanted $1,200. And then the deal went south and then I didn't advertise it.

That was a neighbor doing that. Well, Jana, I know it's not ideal, but 70, there's still a lot of 70 year olds who get out there and work and hustle. Can you get out and get a job? Well, that's debatable. I was in physical therapy last year for almost a year. I couldn't stand up or walk. And so I can't do any jobs like cashiering or things like that. What about like a customer service role from home that you could do on the phone?

Anything to create some income? I have thought about that and I've been looking into it. However, the, uh, the leads that I have, the websites that I've gone on were just like take a survey, you know, and then they call you with windows and things. And they weren't really real, um, job opportunities like they said they were. So I've kind of hit a dead end there, but I was looking at, I thought, well, will Amazon be great to work for? Or somebody like that where I could do customer service on the phone. You're right, I could do that eventually.

You need to have a little hope and get creative because right now this is a dire situation. We have to get out of this credit card debt. We have to come up with money for the home repairs. We're not going to go into any more debt for the repairs. Just take debt off the table. Please, for the love, cut up the cards. I want you to retire with dignity. I don't want you stressing about finances as a two-time widow living alone in this house

that's falling apart. This is not the life that anyone intended for you, especially you. You can still do this. You still could have many, many years ahead of you and you can enjoy them and not sit there worrying about how you're going to pay your bills on that fixed income. you still could have many, many years ahead of you and you can enjoy them and not sit there worrying about how you're gonna pay your bills on that fixed income. Yeah, but you definitely gotta find that margin right now

because yeah, you could have a lot of years ahead and the fact that you can still work, I would encourage you to do it now, especially when you need to get that house repaired so that you can, when you reach that spot that you can't work anymore, we want that house solid. We want you to have a great place to stay. All right, that puts this hour of the Ramsey Show in the books. If you like the show,

please consider subscribing, leaving a review, and sharing it with a friend. It's been a good time, George. Good times as always, Christina. Great job. Thanks to my co-hosts, George. Thanks to Austin, Ben, James, Zach, and Andrew in the booth. And to you, America, thanks for listening. We'll see you next time. This is The Ramsey Show. Do you love a good day, Brandt? Want to see the latest Ramsey Show videos going viral? Check out your favorite moments from The Ramsey Show on YouTube. Go watch and subscribe to The Ramsey Show channel on YouTube.