The Ramsey Show - App - My Boyfriend Co-Signed on His Ex-Girlfriend’s Student Loans (Hour 1)

Episode Date: March 30, 2023

Ken Coleman & Rachel Cruze answer your questions and discuss: "My boyfriend co-signed on his ex-girlfriend's student loans",  "Should I buy solar panels so I can own my own electricity?" Paying off a vehicle, "Should I wait for the housing market to cool?" Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Want a plan for your money? Take our FREE 3 minute assessment: 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

Live from the headquarters of Ramsey Solutions, broadcasting from the Pods Moving and Storage Studio, this is The Ramsey Show. We're here to help you, America, win in your life, specifically your money, and then we look at your work and relationships as they tie into that all-important issue of money. We're here to help.

The phone number is 888-825-5225. That's 888-825-5225. And with me this hour is my colleague, none other than the incomparable, delightful Rachel Cruz. Wow. Yeah. So many adjectives. Thank you. I gave you two.

Feels great. I was counting. I was like, yes. I thought, well, a little extra. Thank you. I gave you two. Feels great. Instead of calling, I thought, well, I'll give you two there to get us started today. So appreciate that. Good to see you. It's going to be a good show. It's going to be a lot of fun. We're here for you guys. Let's start it off with Lauren, who waits in Richmond, Virginia. Stacey and I lived in Richmond for a while when I worked for the governor of Virginia. I like to point out these useless facts. You always do with every city. I think it's the old man in me. It's unfortunate. There's a lot.

I'll try not to do it today. No, every call. I'm going to expect it. Every call, we'll do a city reference. Lauren is up. Lauren, how can we help? Hey, guys. Fun to know that you used to live in Richmond.

Yes, thank you. So my boyfriend and I are currently planning out a potential feature together. We've been going through FPU and during that process, and actually before that process, he shared that in a previous relationship, he co-signed on a student loan with his girlfriend. So looking at that, we're trying to figure out, do we pay that off? Is there any way to like,

what do we do with that because she never finished the degree. And so it's not likely that she's going to pay it off anytime soon. Um, yeah. Wow. I don't think I've ever heard this one, Rachel. This is how long ago was the relationship? Um, it ended probably two years ago and it was three years long. Oh boy, man. Yikes. Well, is the girlfriend... Ex. Oh, gosh, sorry. Yeah, that's okay. Sorry, Lauren. Ex-girlfriend. Yeah.

Is she behind on payments? Is she, like, where is she? She's paying the minimum payments, but it's just going to take forever. Right now it's in forbearance. So before she was paying the minimum payments. Yes. Right now it's on holdbearance. So before she was paying the minimum payment. Yes. Right now it's on hold and all that.

Right. But do you know if she's planning on at all being aggressive towards this debt? No idea. There's no contact. Did the relationship end peacefully? You know, it wasn't tumultuous. It just kind of stopped. Because I just wonder, is she going to try to stick it to him

because he co-signed for it? Yeah, because the only reason as a co-signer are you kind of screwed is if they stop payments and all of that. But if she continues to pay and it's just, I mean, it would suck that she has it for the next seven years. For seven years, he'll be kind of watching

his back being like, oh gosh, you're not going to pay. Is she going to pay? But you guys are only, or he, sorry, your boyfriend is only on the hook when or if something goes awry. Do you know what I mean? Then he would be. How much is it?

$20,000. And what we're looking at is, okay, so let's say we get married, we move together, all that. A year from now, we go to buy a house house and we've paid off everything but that student loan. Is that like negatively affect our credit score? Like, should we just pay it off to get rid of it? Like, what does that mean?

All of it. Well, most of it is in her name. Yeah. But again, I would want to know what she, that's the thing that sucks about co-signing is I'm like, your future is tied to this other person right for until until it's until it's paid off and student loans I mean they're not bankruptable I mean like this is a thing that's going to have to happen so um man I would hate for him to be the one she could look if you guys had contact with her to refinance sometimes when you refinance you can get, you can get a co-signer off

of the loan. Student loans, are they federal or private? Federal. Federal. Okay. I would look into that, Lauren, and see. And it would be worth a conversation to reaching back out to her, even though it's very awkward um but to see if she would consider refinancing to get his name off of it because of his plans moving forward um but if not i would hate for you guys to be the ones to go and pay something that's not yours and if she's not late on them right like it's not gonna penalize him um necessarily but if she is late and she doesn't pay him then that's the that's the stupid tax that you pay as a cosigner unfortunately and i and i also hate to take us where we got to go here

lauren but you said we multiple times do we need to pay this off and there's no we unfortunately this is he's not okay so not yet well. We're very close to engagement, marriage, all that. Very exciting. Within six months. Okay, very exciting. But until then... Until then, nothing. Until then, this is his problem. Yes.

And I hate it for him, but I agree with Rachel. I would be reaching out with the olive branch, the metaphor to say, hey, so... Can I get my name off this? Can I? Would you work with me on this? Can we look to see if we can refight? Yeah. You don't want you work with me on this because yeah you don't want to be with me i'm okay with that you know i would try to negotiate that on good faith to say hey help me out do me a solid i tried to help you out that was that was not so smart that's right

um but again it would take her she's got to play ball play ball. And if she doesn't, it's like, that's it. I mean, but we get this call with cars, houses. You know, this is a new trend, by the way. I haven't asked you what you think of this. The new trend is, and I'm sure you know of this, but a lot of single people that may just be friends, they're not even romantically connected. They're buying houses together. Together with both names names trying to get equity and all that oh because

they can't afford to buy a house on their own so they're going okay i'm really good friends with my buddy bob yeah and so bob and larry are gonna buy a house together and it's like that can't end well no but this is a thing that's happening names on the deed and the mortgage all of it yeah no don't do that. I know, because in the moment, it feels like a really smart financial move. Well, I mean, yeah, what if a three or four go together? They all go, well, wait a second. I can put my down payment in, you put yours in, and four of us become roommates, one house. Yep.

And then, and not just roommates, but owning part ownership within it. But they think, oh, it's a smart roommate play. We all get a little bit of equity. And it's going to be great. And then Bob goes off doing Bob's thing. And you're like, what? Right. Bob goes and meets Luann.

And now Larry's screwed. What am I going to do, Bob? Why are all these people 80 years old? I think it's funnier. Because if I said Eric, it's not funny. But if I say Bob meets Luann, that's funny. But if it's I said Eric, it's not funny. But if I say Bob meets Luann, that's funny. But if it's Eric and Meredith, it's not funny. That's why I go with the older names.

But there really is something here. Don't do that. We're having fun with this, but this gets really contentious. Now, what you can do, we've heard people do this, is they go and they buy, you know, a starter townhome or condo. They get two roommates, not on the mortgage, not ownership. Yes, that's the point. And they help pay the mortgage and all that. That's smart.

Sure, that's a play to go. And you're offering them a discount. But when it comes to ownership, yeah. I mean, any level of sharing, unless you're married and there's a legal binding contract there. Other than that, not smart to co-sign. Don't put your name on people's debt.

Don't go in together thinking you're going to get a better deal with equity and the house and all that because Bob and Luann, man, they are trouble. They're going to go do their thing, and poor Larry loses his pal. And he may lose a lot of his money. Don't do it, Bob. Not worth it. Larry, be pals. Play golf. Whatever it is you do, be pals. You know, play golf.

Whatever it is you do, don't co-sign on a mortgage and all that stuff. It just never works out. There you go. And Luann is the bad girl in all of it. Because she won Bob's heart. How did this all go so bad? Because you didn't buy it the right way for yourself. So there it is. Alright folks, more

crazy analogies, funny names, and your calls. Coming up, this is The Rancher Show. Hey, you guys. Health insurance costs are only moving one way, and that way isn't down. And if higher costs aren't enough, the wait times to see your doctor are longer, and it's harder than ever to get anything approved through the bureaucracy. So if you feel like the system is working against you, try a biblically-based alternative to health insurance, Christian Healthcare Ministries. CHM is a health cost-sharing ministry that's helped hundreds of thousands of families like yours

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your questions about your money and your work and relationships. We want to help you break through and get where you want to go financially. And many times that has a work component to it. In fact, Rachel Cruz, who's my co-host this hour, I mean, Dave has said for decades, your greatest wealth building tool is in fact your income. Yes. And we believe that. He's right about that. And we live in a world right now, an economy where if you need to make more money to get through the baby steps, whatever baby step you're on, or you're just not really happy where you are and you want to do that thing. It's never been better. Unemployment is low. The gig economy is roaring.

And I want people to understand the gig economy. You've never heard that? Yeah. Oh, I get to teach you a term. So the gig economy is I have a full-time job or uh at a side gig okay okay yeah yeah and so it's like so because it's so easy now like gigabyte no side gig uber uber eats yeah for sure the side hustle yeah yeah they just call it the gig economy everybody's got a phrase right good yeah it's kind of fun i feel like i'm in the end so as you know i'm deeply passionate about helping people make more money and actually enjoy doing it so they can get through these baby steps that we talk about. And so I'm going out on the road, Rachel.

No backup singers. We all travel together for building wealth. I know. We do smart covers. It's the Ken Coleman. It is the Ken Coleman show. The night to shine. It's going to be fun.

And so this is for anybody, Rachel, who feels stuck. It could be a variety of reasons. Toxic workplace. I feel like I've hit my lid. There's not much growth opportunity there where I am. I want to launch a side business. I don't know what the idea is, or I know what it is. I don't know how. And I'm going to teach on a formula that'll always give you a breakthrough when you're dealing with some fear and doubt and uncertainty and so i'll be speaking on that formula and then doing the thing that i love most is getting out in the crowd which you're so good at thank you you really are that you and deloney we do our little thing yes and george and i do it when we're on the road together you guys do it uh and just that just the energy and the engagement, that's what's fun about these kind of events,

and I'm glad you're putting this in it, because it's one thing to sit in a seat and to watch something and take it all in, which is what we usually do at Ramsey events, because we want to give you instruction and inspiration, all of it. But when you can add that element of being with people, when you're just down there, I'm like, there's a level of energy to that type of event that is so great. And the content that comes out of it in the moment, these real-life stories, real-life

people talking about what's going on. And so, yeah, you're a master at kind of pulling all of that out and engaging in that way. So these events are going to be so fun. I'm so excited for you. They're going to be a lot of fun, and it could be a great gift for somebody. We have multiple opportunities. We have a VIP opportunity to spend time before the event

going even deeper. We're going to take questions live from the crowd. It's great energy. Here are the dates. April 20, coming up in Kansas City, Chicago,

Illinois, May 16, Atlanta, Georgia, May 18, Dallas, Texas, May 23.

You can get your tickets right now at ramsaysolutions.com slash events, ramsaysolutions.com slash events. I would love to see you there. High five you, hug you. We're going to have a big time. All right now at ramseysolutions.com slash events, ramseysolutions.com slash events. I would love to see you there, high-five you, hug you. We're going to have a big time.

All right, to the phones we go, 888-825-5225. Sterling, I wish my name was Sterling. And he's from Charleston. He's got two great from Charleston. It's perfect. Sterling from Charleston. I'm a little jealous of your name, sir. Sterling, how can we help?

Hey, buddy, I really appreciate that. I'm jealous of how smart you guys are. I'm about to expose that that is unplaced jealousy here, but we are going to try to help you. What's going on today? I appreciate it. Hey, I've been listening and doing the Dane Ramsey thing for the last five years. I'm basically debt free now

because of y'all and i want to just thank you very much for all that i really truly do congratulations i'm a huge fan and um but i did i was looking at um at this solar thing i looked at the um the last episode with dave had a question on there and i'm i'm just kind of curious because the way i look at it is a little bit different um you know i like to say i'm debt curious because the way I look at it is a little bit different. You know, I like to say I'm debt free, but the way I look at it is my utility bill is a debt, and it's a lifetime debt. And if I go and put solar panels on my home, I'm going to eliminate that. And when my panels are paid off, I'm not going to have a utility bill or a solar payment. And that's when I actually own my own electricity. I am now my own electric company. I'm not depending on the local utility that has ever-changing, increasing rates.

Okay. Sterling, Sterling, Sterling, I'm interrupting only because you have proven to us all that you did a really good job listening to their sales pitch. I feel like you've read the brochure seven or eight times. You nailed it. You laid it out exactly the way we see it. And if the world goes down, Sterling's going to have electricity. We're all coming to Charleston to have a grill out at Sterling's house. It's burgers and dogs.

No, Sterling, listen. Let me ask you some questions. I have gas appliances, so I'll still be able to cook those for y'all. Ah, there you go. Sterling, I want to ask you some questions. How much is it going to cost you? Because you're going to have to finance it

from the company. After the tax credits, okay, it's going to cost me roughly about $10,000. $10,000 total for your solar panels? After the tax credits, okay, it's going to cost me roughly about $10,000. $10,000 total for your solar panels? After the tax credits, after the 55% back, because we get a 25% state tax credit, and we also get a 30% federal. Okay, but how is that applied? Because, again, you are nailing the talking points. How is that applied? What's your upfront cost? It's more than $10,000. So it's $20,000. We'll call it $20,000. I know. I've been down this road before,

Sterling. I get it. $20,000. $20,000, yep. All right. And so how long is that going to take you to pay off? Well, it all depends on the loan. So let's say it's set up on a 10-year loan. I'm going to put it on 10 years. Sure. And the loan payment is going to be less than, it's about $12 less than what my utility bill payment is a month. And it never goes up. It's a fixed rate, which is really good. I know. So you're paying, you're going to borrow money

to save money down the line on your utility bill. And I don't buy it. I don't believe that your utility bill goes to zero. So you've bought that bill of goods too. That's not absolutely true. I don't think that's true. I would challenge you to research that a little bit more. And the sales guy is not the guy. Let's say it doesn't go to zero. Let's say it doesn't go to zero. Let's just say it's very minimal. Let's say it goes from $200 a month to $30 a month. All right. They do do that. I get it, brother.

So run the math on that. All right. So we've saved how much money on that example? $170, right? Yeah, $170 a month, yep. Per month times 12. I don't have a calculator. Hold on.

Let me get out there. We'll call it $1,400 a year. Yeah, right. So $1,400 a year right so 1400 a year but you paid 10 000 in loans plus interest here's the deal if you want it so bad save up the 10 000 and pay cash okay that's my that's what i was gonna ask you okay don't borrow the money bad thing okay don't borrow solar's not bad i love the sun i need a little more sun look at me i'm pasty i could use a little more vitamin d sterling but please come to charles it's 85 today at

park oh very jealous we're there yeah sterling we're never going to encourage anyone or suggest to anyone to go into any kind of debt even it's for the sun even for the sun period period a mortgage is the one type we won't yell at you for, but we have our formula that we kind of run it through. But other than that, we're not going to sit here and say, oh, yeah, you should go take out a loan for 10 years for solar panels. Because everything I have read, and again, I'm not deep into this. I'm not a solar panel expert.

Really? I'm a little surprised. I know you're shocked. I know everyone's shocked. Even though I drive a Tesla, I'm not into the solar panels. This is Mrs. Electric right here. But most of what I have read, Sterling, when it comes to renovations on homes and getting the value of your home up, solar panels, it's a negative. It does not increase value for your home. I know you're not looking for the value of your home. You're looking for your utility bill.

So my thing would be, if you want to save up... Because the rates are going up so much. It's crazy what they've done in the last... Even in the last 12 months, I mean, I've grown from 12 cents... I hear you. But Sterling, you've got to do... Because like 17 cents. Right, but you've got to do more research than the company brochure that they've given to you. And to make sure... No, I have.

All right. Pay cash. So listen, do your solar panels. I think it's great if you want to do that. But just pay cash. Don't take out a loan. Go into debt. Acquire risk for the fact to have these solar panels. So that's going to be true for anything,

including the sun. What do you call those things that we see on TV and cartoons where a person's trying to get sun? It's like a silver. The reflector thing. That's not a solar panel, though. That's a solar panel for your face. No, that's not a solar panel.

I know. I kid. You know, listen, you've got to be careful about all these things. There's a lot of nuances. Yeah. Do your homework. Oof. I don't know.

I like paying for my electricity. It's not debt. It means I'm cool and warm. Welcome back, America. You've joined the conversation about your money, your work, and your relationships here on The Ramsey Show. I'm Ken Coleman. I'm joined by my colleague, Rachel Cruz. We're here for you this hour. The phone number is 888-825-5225. That's 888-825-5225. Back to the phones we go. Dallas, Texas is where Don awaits. Don, how can we help? Hi, Ken. Hi, Rachel. Good afternoon to you. Good to talk to you. What's going on? Well, here's the deal. I'm 51. My wife's about to turn 50.

I work for the state. I'm a criminal fraud investigator. My wife, through the Lord of Great Heaven above, she got a better job, and we're going to be making a lot more money, which, you know, God grace us. So the issue is she switched jobs. Now she has a $14,000 into her 401K. And the issue is that she wants to move it and not leave it there because it's kind of dead and kind of lose money. Now, the other issue is, is that we want to, with this increasing and in about the next two to three months, we're going to be totally debt-free except for the house. Okay. So no debt except the mortgage, which we're going to still pay

off a little early at the time and all that. But we want to start investing more to our age. Now, my wife is an immigrant, someone from the church. He's one of those guys. Me doing what I do for a living, I don't trust him. He starts seeing how IULs are the best thing in the world and then annuities and all this stuff and for the new investments. And he gave the greatest spiel until until i said here's the thing my me and my wife trust the dave ramsey people like you okay we trust we trust you um the thing is he's saying take this money you'll be millionaires

and all this money from an iul or take that 14 000 from the 401k you can move it into annuities and all this stuff. So my thing, my two questions is she doesn't want to roll over to a new job on the 401k, that 14,000. She wants to put into something else, maybe some kind of savings like mutual funds, what have you. She's just, she's not a fan of stocks, you know? So my thing is we're going to invest more.

One, where should we move that 14,000? Secondly, if we're going to invest more. One, where should we move that $14,000? Secondly, if we're going to invest more, should it be more in the 401k? And also, should it be mutual funds or something for our age where we want to get that growth? Yes. Okay. Great question. So one thing she needs to understand, though, mutual funds are stocks. They're 90 to 200 stocks put into a fund. So when you are investing in your 401k, your Roth IRA, any types of those investments, those are just kind of the coverings under. They use that money and use that to invest within mutual funds, which we are a fan of. We are not a fan of single stocks.

So I understand her risk if she's like, oh, I don't want to go put all my money in a stock, right? Because that feels scary. But with a mutual fund, you're diversifying your risk. You're within 90 to 200 stocks. So if I were her, I would roll over that $14,000 from her last job. You can even roll it over just to a traditional IRA. But if I were you guys at your age, Dawn, I would pay off your debt, like you said you're going to do in the first in the next two to three months. And then I would be maximizing all of the retirement that I could. And so that is Roth IRAs. That is 401ks.

If you guys even want to look into like your HSA health savings account, there can be a point even with that. You stop withdrawing for medical and you can use that as a retirement vehicle, all of that. So annuities, the only reason that we would suggest ever even considering it is if everything is maxed out, if your house is paid off, you are done with everything, a veritable annuity is one that we would say you could do, but we're just not a big fan of it. They don't keep up with inflation. There's tons of fees. They're really confusing. They're hard to transfer. It's kind of a mess. So no, annuities is not something that we are like big fans of. Again, there's fixed annuities, veritable, why can't I say that word? It's tough. It's a tough word. Veritable, it's tough. But all that to say that would be the only reason don that we would ever

even consider that so no this guy is in the insurance world i mean i know his i mean i know what he's what he's pitching it sounds effective uh and so no i would not be scared of what's going on the market yes did not do great last year but the market goes up and down all the time and you guys are in your 50s you still have another decade to write all this out so if i were you guys i would be flooding all of my retirement up to 15 percent of my income into retirement 401ks roth iras traditional ira if she rolls over from her job uh and then be working to pay off the house that would be my goal because that's going to be the fastest way for you guys to build wealth because again annuities i mean there's some of them don't even keep up with inflation and so it's so it would not be a route that I would take. It's not a route that I'm taking

personally. And Don, we want to encourage you, if you don't have a smart investor pro, you say, hey, I trust the Ramsey people. And then you have a conversation with people that can debate, they think point for point, and they got a very good sales case. We want you to get with a smart investor pro in your area. Go to ramseysolutions.com, interview two or three. And as Dave has said many, many times, we want to make sure that you understand why we say what we say and you understand why you believe that to be the best thing. And I would take your wife with you. So that's the best play. They're going to follow the advice that Rachel just gave and they're going to make sure you understand it so you're in charge. So we want you to do that. Let's go to Boston, Massachusetts now. John is there. John, how can

we help? Hey, how's it going, guys? I appreciate you taking my call. You bet. So my situation is kind of a personal one. I'm 26 right now, a decent amount of money saved up. I don't have a house yet. My only debt is my car. It will about 11,000. I'm working a sales rep role. And so with that, I get a car allowance. Now I have enough money right now to, in order to pay off the car. I'm wondering, do I pay it off upfront and then continue to pocket the car allowance or do i just keep throwing the money from the car allowance towards the car over the course of the next year or so yeah will they still give you that car allowance even if you don't have the payments on it will they reimburse you for other areas okay yes so in that case i wouldn't 100 would just pay

it off and then you can just in pocket because at that point, you have no risk. You don't owe anything on the car. If you switch jobs, you're not stuck in this loan that you could have had paid off, and you're still paying interest, all of it. So, yeah, if I were you, I would go ahead and just pay everything off and then pocket the car allowance if they'll do that. Okay, so basically like tomorrow would be the best bet. Just, hey, get rid of the loan call it a day i would how much do you have in savings i have about 40 grand in savings oh yeah and that's your only debt so why wait till tomorrow i'm curious well i guess right yeah

right now would probably be a better bet i'm being serious on that question because let me tell you something between this phone call and the time it takes for you to get with your bank and pay it off today you might run into somebody who's got a different opinion you might start to doubt it and think about well I sure would like to keep that 11,000 you know and so we can all do this I don't care if it's a relationship decision that we know we need to make, a financial decision, a professional decision, a physical decision. You know what? I probably should throw out all of the chips and salsa in my house if I want to lose 20 pounds.

And then you go, if I don't do it right then and there, well, I can tell you I'm eating chips and salsa later that night. I mean, it's this idea of if you've decided, act in this moment, like hang up the phone and start the process right now. And I just, this is a human condition. We all do this. Once you decide, do it. Don't wait. Does it make sense? It does, yes. I guess the only thing kind of holds me back from it and the reason why I wanted to ask the question in the first place was that we were were trying to save up for a house so i didn't know if it would make more sense to keep more money for a down payment or whatnot uh rather than pay off the car since i have that

car allowance coming in yeah no i hear you no yeah i would yep i would still i would be debt free and then the rut the remaining um money that you have you know that 35 000 i would have an emergency fund so i wouldn't even put that towards your down payment i would look to see okay what's three to And the remaining money that you have, you know, that $35,000, I would have an emergency fund. So I wouldn't even put that towards your down payment. I would look to see, okay, what's three to six months of expenses? Take some of that cash, put it aside. And then from there, start building up your down payments for Baby Step 3B. And the great thing is, John, you're having this car allowance come in.

That's like free money to put toward the down payment. Yes. And not a car loan, nothing going out. I love that, Rachel. So you can just save that up. So that's what I would do, John, in that order. Yeah, because here's what happens. Pay it off now.

You have no debt. And ooh, we get a nice jump start in the form of a car allowance to building up that down payment. I've got to tell you, you're going to be so happy you did this. Don't wait. Hang up. Go. Go now.

Do it. Do it right now. So exciting. You know, it would be fun to see if we could zoom in and watch him do it. See it live. See it live. Just watch somebody just pay their car off because so few people do that. But anyway, good stuff. Thank you for the call, John. We appreciate you very much. All right. We'll be right back. Don't move move more Ramsey show coming up welcome back to the Ramsey show I'm Ken Coleman I'm joined by my colleague Rachel Cruz and if you're new to the program whether it's on YouTube or your favorite podcast platform or radio Sirius XM however you're engaging with the program and and you hear this jargon, you hear baby steps, you're kind of going, what's this whole thing about? Where do I fit in this deal? We've got a wonderful tool for you called Get Started, and it'll allow you to just kind

of see where you are financially and how we can get you plugged in and get the resources that you need. It's the Get Started button on our website, ramsaysolutions.com. ramsaysolutions.com. Click on Get Started, and we'll get you off and running. Let's go to Atlanta, Georgia now, where Hunter is. Hunter, how can we help? How's it going, guys? We're having a blast. What's up? So I'm 20 years old. I make about $72,000 a year. I'm really looking to get into a house either here soon, or I'm thinking maybe I should wait next year for the housing market to kind of come down a little bit. I'm just looking to get

y'all's thoughts on that. Wow. Well, that's great. I mean, you're a young guy and looking to buy a home. I've got about $6,000 right now. I haven't really started the saving process. Okay. But just after paying off all my credit cards, that's kind of what I've been up to within the past two months. Yeah, that's great. I think, Hunter, are you in school at all, or you're just working full-time? Just working full-time. Okay. With my mom.

Yeah, good for you. Good for you. Here's what I would do, Hunter. I feel like we answer these questions sometimes if I were to wake up in your shoes. At 20 years old. I'm assuming you have no other debt. You said you paid off your credit card, so no other debt? Just a truck note.

Yep. Just a what? Just a truck note. Okay. How much is that? It's about $500 a month. Well, total, what's the loan? $30,000.

Whoa. Whoa. That's a nice truck. What kind of truck? Truck Hunter. Just an F-150. Just an F-150. Just an F-150. That thing would run over my car like it was a matchbox

car. Those things are gigantic. And so you've got a truck note, and do you have any savings at all? Just the $6,000. Just the $6,000? Okay. Okay. Wow. So here's what I would do, i would kelly blue book the truck

and just see that's my favorite thing to do what year is it 2015 2015 f-150 all right how many miles 92 when did you buy it uh two months ago. Okay. Recent purchase. So we always say if you can't pay off your car in 12 to 18 months, you have too much car. So the fact that you make 70 a year, is that what I heard? 72, yes ma'am. 72, okay. So you have no expense. You're living with your mom.

Not a lot of expenses. So you could pay this off in a year. So if you loved the truck and wanted to keep it, my next step would aggressively be paying off this truck. I would work extra. I would pay this off as fast as possible. I would throw five grand of your six grand at it and get it out because we have found, Hunter, the fastest way to build wealth from point A to point B and wealth that you keep, not just like this lottery winner type mentality, is becoming debt-free, having savings in the bank that you can get to when you need, investing, and real estate. So all of these are big components of building a really solid financial picture. So for you, that first hurdle is getting debt-free. And so this will be your truck. So you could either

sell it. Did anything come up, Ken? I'm narrowing it down. I was letting you do the advice here. So I would either, to get you on this plan faster, would be to sell the truck and start saving up a fully funded emergency fund. But if you wanted to keep the truck, then it would take you, you know, nine months, 12 months longer in this process to pay it off. Then I would want you to get a big emergency fund of three to six months of expenses and then start looking to buy a home and for your first home um you know i would save anywhere from five percent up to 20 20 is great i

know that's a lot uh in the market today but you avoid pmi you avoid there's a lot of great things of having that 20 percent um but for first-time home buyers we would say five percent so so there's a couple of things i would do hunter before i go I go and purchase a home. All right, so I want to give you the numbers to plug in. Okay, what is it? So at an outstanding state, all right, it's worth $17,364. Cleaned, $16,800. Average, $15,900. Why did you get a $30,000 if you bought this two months ago?

It looks like you paid double for it. They were hard to find. I was trying to get it. I had a brand new F-150, and I was paying about $1,000 a month for it. They were hard to find. I was trying to get it. I had a brand new F-150, and I was paying about $1,000 a month for it. So I decided to stop being stupid, and I cut it in half. I guess that's still not the smartest. No. Yeah, so you overpaid.

And this is according to Edmunds. So, I mean, you can do your homework on this, but that's what you're looking at. But if you were to do that, then how we walk people through that, Rachel, what do we have to do? Yeah, so what you would do, Hunter, in this case, is you would sell it for what you could. Man, I would go back to the guy and be like, 25? Who'd you buy it from? You don't have to say their name. We're not trying to out people. Was it a dealer or was it an individual? It was a dealership. It was a dealership. They're not going to do that. Man, Hunter.

Oh, shoot. I hate that for you. Did you look to see the value of F-150s around at that year? Or you just were doing quick, making quick decisions? Making quick decisions, trying to get out of a bad decision. And you know what, Hunter? This is great. You're 20 years old.

You made a mistake. You can get out of this. Do you feel that? You feel that? You're like, oh, crap. I could have gotten this for $17,000, but 30 for it that wasn't smart so you're learning this now which is great learn it now versus learning it over and over and over again when you're 40 years old so so I would if I were you I would take the hit and just say man I'm gonna go take

out a small loan and I would you know take out a you know 20 21, man, I'm going to go take out a small loan. And I would, you know, take out a, you know, 20, $21,000 loan, which is going to cover your, because you're underwater in it. So it's going to cover the difference and leave you a couple of thousand bucks. No, I wouldn't. You have money saved, Hunter. No, no, no. I'm so sorry. What condition is it in?

What would you say? Outstanding? Outstanding, I would say. All right. So let's say you could get 17 for it. All right. You've got it in? What would you say? Outstanding? Outstanding, I would say. All right. So let's say you could get 17 for it. All right. You've got six in the bank. All right. So if you get 17 for it, you're still going to have to get the smaller loan, like Rachel's talking about, that covers the difference. If you owe 30, so you got about 13 if you don't put any into it. If you put six into it, now you're down to seven grand. But you've got to have a car. I know. That's why I'm walking through it. So you've got to have a car. So I take the six and I get myself a decent SUV that's going to get me from point A to point B.

Now I'm going to pay off the seven as fast as I possibly can. That's right. That's right. That's what I would do. And then Hunter, you build back up. So then you get yourself a $15,000 truck after you save up some money, you sell the other one and you kind of step your way into it. You get a decent car and now we start saving for a home. That's the process because here's, if you don't do that, I want you to understand why Rachel's recommending this.

This truck is devaluing every time you drive it. And unless you're going to go all in and pay the 30,000 off like really soon it just doesn't make sense to do that you're so underwater with this thing yes sir does that make sense to you yes sir so let's take the hit so take the third so yep take the 13,000 loan versus the 30 that's right you're switching you're swapping those two. And then take, I would take five of the six, have your baby emergency fund of $1,000. Go get a $5,000 car, Civic, whatever it is. And it's not gonna be a pretty car, Hunter. You're used to driving a brand new truck.

Now you're used to driving a nice $30,000 truck. It's not gonna feel like that, but that's okay. That's okay. Because again, your goal here is to get from point A to point B of building wealth. And the fastest way to do that is for you to use your income, a great income, Hunter. You're making $72,000 at 20 years old. It's incredible.

I found him a car. Okay. I went on a website and I typed in used cars under $5,000 in the Atlanta area. What'd you get? I see a 2002 Toyota Sequoia. Perfect. 225,000 miles. But those things will run for 500,000 miles. Yeah, and you only need it for like seven more months. 49.95. You only need it for like seven months because you're going to be saving on the side two, Hunter, and you're going to sell the

Sequoia for $5,000 again because it's probably not going to go down in value. And then you're going to match it with another $5,000 that you save from your income, and then you're going to step up to a $10,000 car. And you're going to slowly keep doing that until you're to the point that you're like, yeah, I have some cash to spend. So it is possible. It's possible to do this, and that's what we would do, Hunter. Does that make sense? Yes, ma'am.

All right, Hunter. There it is. Great job. Thanks for calling in. And that's the first vehicle I found. I mean, if you want the gas savings, how about a Camry for $3,800? There you go. Those things will run.

You can do this all day long. But your pride is going to hurt, Hunter. I know. Don't let your pride get in the way. Yeah. You're 20. You're doing great. That Camry's not pretty.

But it's fine. You're only going to have it for six months. There it is. So it can be done. Rachel Cruz, fun hour. Thanks for hanging out. Always fun to be with you. I want to thank James Childs and our fearless crew behind the glass for keeping us on the air. And we want to thank you, America. This is your show. This is

The Ramsey Show. Hey, it's Ken. If you love the show and want a deeper dive on your money journey, we have a weekly newsletter that gives you trending and helpful articles and tips on following the Ramsey way. Go to ramsaysolutions.com today to sign up for our newsletter. Again, that's ramsaysolutions.com to sign up for our weekly newsletter.