The Ramsey Show - App - My In-Laws Want To “Help Us” Buy a House (Hour 2)

Episode Date: January 26, 2024

Live from the headquarters of Ramsey Solutions it's the Ramsey Show where we help people build wealth do work that they love and create amazing relationships I'm Ramsey personality George Campbell joined by my esteemed colleague Jade W Warshaw. And we're taking your calls, America, at 888-825-5225. And I say America, but we've been getting more international calls. And it's really fun. That's right. International impact, Jade. International impact.

And speaking of the nations, I have to mention that you're national. Number one national bestseller. That is so kind. I have to mention it, George, because the other day it wasn't number one. And then you were like, Jade, it is now number one. Publishers Weekly hadn't put their list out yet. And we were number one in hardcover nonfiction and number five overall out of all books.

So that was humbling. And I told them in the first segment of the show that I feel like a turtle on the fence post. You know, the turtle didn't get there by itself. Yeah, we have an amazing team here. Dave has built this platform. So I'm just a turtle. You know, I always saw myself as a fence post. You know, the turtle didn't get there by itself. Yeah. We have an amazing team here. Dave has built this platform. So I'm just a turtle. You know, I always saw myself as a tortoise.

I kind of look like one. Your analogies are second to none. Thank you. I try really hard, but thank you, Jade. It's been fun. And you just launched a book that was also bestseller with money's not a math problem. And it's big, making big impact.

It is making big impact. People are changing their beliefs around budgeting and money. And's the biggest part it's the hardest part listen i feel like a wiener in a steakhouse you know there it is that's my other favorite i know i was just setting i thank you for the setup george it's an alley oop right there all right let's go to the phone lines mitchell joins us in anaheim california mitch what's going on? Thanks for taking my call. Sure. So my problem is, or question is, I'm trying to buy my first house. I'm 35 years old, married. Southern California is an expensive place, so it's hard to get started. My in-laws are offering to provide a down payment of $200,000 toward a $900,000 house. However,

the down payment is not, it's not a gift. It is a investment for them. And so it would be an investment property for them where, you know, down the line we sell it, they get 50% of the profit. We get the other 50%, but we also get to put money into the home instead of paying rent. Red flag, red flag, red flags all over the play. we get the other 50%, but we also get to put money into the home instead of paying rent. Red flag, red flag, red flags all over the play. I can tell you don't feel good about this by the way you're talking about it. Yeah, I mean, if everything worked out financially, it would help us get started, obviously, you know, because right now we're paying $3,000 a month in rent.

Sure. It's one of those scenarios where everything has to play out just perfectly in order for it to work and there not be anger or bitterness or he said he was going to do this or ooh-wee. Yeah. And so, I mean, I'm worried about, I mean, what happens when something breaks on the house? Who's paying for it? What happens when, you know, there's taxes due? What happens when the house appreciates the $2 million and now they get a million dollars?

Yeah. And they're stealing your wealth. Mm-hmm. I don't like any of this, man. Me either. I don't do strings attached opportunities. Yeah. And so I would say that is so kind of you guys.

Thank you. Right now, we're just trying to buy our own house, our primary residence. We'll maybe get there down the line to purchase an investment property. But when we do, we're going to pay cash for it. That's a big goal for us. And if you guys want to purchase this investment property, you go for it. We will support your decision, but they don't pay your bills and I would not get them intertwined as you build wealth. Yeah, definitely not. Okay. Definitely not. Listen, so how long is it going to take for you guys to save up a down payment? Let's start thinking about what it means for you. Yeah, four or five years, hopefully, in that range. And you have no debt with an emergency fund right now? Where are you guys at financially?

I have, I mean, stocks, $150,000. Cash, more like $30,000. Okay. And no debt? My car debt, $20,000. Okay, we're going to pay that off today. How would that sound? Yeah. And I'm also interested in moving this money out of these stocks.

Is it just non-retirement and single stocks? Exactly, yeah. What if you just put it in like an index fund for the next five years? That's, yeah, that's generally what it is in right now. It's in a couple different index funds. Well, is it index funds or is it single stocks? Because George asked that question. Index funds. Okay. So it's spread around a fund of lots of stocks in one spot, right?

Exactly. Okay. Just checking. All right. Well, I like that plan. I like what George said. I'm taking 20,000 of your 30K in cash, paying off the car. Now you've got 10K. You can start building that up to three to six months. And then anything on top of that, you know, keep chunking it away. Okay. And you'll have $200,000 of your own in no time. I still think you might need more than that.

What's your household income? $250,000. Okay. And you're going to be buying in the Anaheim area? Yes. Okay. So I'd start setting a goal and saying, hey, we're going to buy something reasonable for our first home. The first home should always be the worst home you live in.

No such thing as the dream home when it's your first. So don't try to aim too high. Get something reasonable. That mortgage payment should be a quarter of your take-home pay. And that's going to help you do this in a smart way. What does $900,000 get you in anaheim because are you still are you still shooting for the 900 000 mark or not anymore because the parents aren't involved um with the parents involved that's what you're shooting for without the parents we'd probably knock you know

200 off like 700 the town hall exactly it's like a two three bedroom town home that's all you need my first two homes were town homesomes and we have no regrets. And I think too many people poo-poo the non-single family home because they wanted the big yard and we wanted this and we wanted these countertops and five bedrooms. And I'm like, it's just you guys and a dog. What do you need five bedrooms for? It's a ladder. Climb the ladder one rung at a time.

And townhomes still appreciate in value. It's a beautiful thing. And there's less maintenance. Insurance is cheaper. So there's a lot of benefits a time. And townhomes still appreciate in value. It's a beautiful thing. And there's less maintenance. Insurance is cheaper. So there's a lot of benefits to condos and townhomes there. And so I would start there and set that goal, get aggressive about it, get that emergency fund. But something tells me you're not going to go pay off this car today, Mitchell. Probably not.

I mean, we've been doing a couple thousand dollars a month here and there just to have a reserve fund. What would it take for you to pay off the car today? I mean, I'd like to have a rainy day fund of cash. Well, let's put it in perspective. Let's put it in perspective. What's your car payment? And what are you putting towards it every month? It's $550 a month. So it's $550 and you said you're putting a little extra on it every month. If you paid it off, how much extra do you put towards it every month? It's $550 a month. So it's $550 and you said you're putting a little extra on it every month. If you paid it off, how much extra do you put towards it every month? It's kind of just whatever extra we have.

Give me a ballpark. $1,000, $2,000. $1,000 or $2,000. So let's say $1,500. Okay, so if you paid it off today, you have now freed up $2, fifty dollars that you can put away every single month into your rainy day fund think how quickly you'll save money like that nine months you're done yeah okay just a little food for thought yeah no i'll i'll talk to my wife and see if we can do that then i love it whose car is it hers uh huh

the plot thickens well I hope she goes with it and make sure you present it in the right way not like hey I called the Ramsey show and these dopes are like

telling me to pay off your car I don't think it's a good idea but what do you think yeah yeah that's that's a good point whatever advice

you guys make $250,000 what do you need a car payment for yeah but it's true like whatever advice we give people they got to ingest it and decide that this is what I believe too. Because if you're pitching it to your spouse and you're like, listen, these bozos told me to do, then you're never going to sell it, right? It's got to be your idea, not our idea.

Car loans are the number one wealth killer in my book. It's now surpassed student loans, Jade. It's a nightmare. Get out of it, Mitchell. You're too successful. You're too smart. This is The Ramsey 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,

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So listen, y'all, there's no better way to take care of health care costs. CHM programs start as low as $98 a month. So learn more today and join at chministries.org slash budget. That's chministries.org slash budget. Welcome back to The Ramsey Show. I'm George Camel, joined by Jade Warshaw. It's a free call at 888-825-5225. Well, if you missed it, we made a big announcement. We've got a brand new event happening on May 10th and 11th right here in Nashville, Tennessee at the headquarters. It's called Total Money Makeover Weekend.

This is exciting, and we love a good live event. This is a brand new event. In one weekend, you'll get a crash course on everything we teach about money. We've got brand new talks from all of the Ramsey personalities, including Jade, including Dave Ramsey, Ken Coleman, John Deloney, Rachel Cruz, myself. We're going to be talking about budgeting and beating debt, investing, and so much more. So no matter what baby step you're on, no matter how long you've been listening to us, this is going to light a fire under your butt to keep making progress on all of your goals. So if you want to join us, be sure to get your tickets because right now we have some early bird tickets and this is about as cheap as it's going to get. Limited time only. Get your tickets now for 99 bucks,

ramsaysolutions.com slash events and start making plans. Book the flight, get the hotels, budget for it. You got time, but it's running out for these early bird pricing. So May 10th and 11th, join us. There's going to be live Q&A throughout the weekend. Smart Money Happy Hour is going to be live in front of a studio audience. That's you guys. Listen, George, I have a groundbreaking idea for my presentation. No, I'm not going to tell you what it is, but I'm just letting the folks know it's going to be different. We're going to break some ground, apparently. I don't doubt Jade. I never do, because I'd be on the wrong side of that. So join us. Total Money Makeover weekend,

May 10th and 11th. Get your tickets. RamseySolutions.com slash events. Tell your friend. Text your mom. Bring the whole crew. All right. Michelle is up next in Charlotte, North Carolina. Michelle, how can we help today? Hi, it's such a blessing to talk to both of you today. Thank you for taking my call. I have a HELOC. The balance on the HELOC is $32,000. I have $28,000 in my savings account. And my question is, should I take all of my savings except the $1,000 and put that towards the balance of the HELOC, or should I hold back some of my savings? And my concern about that is I'm single, I'm 55 years old. I just had to replace my heating and air conditioning system, and I've had some home repairs over the last few years. And my concern is that my savings would be depleted

if something else were to happen before I saved up my full emergency fund. Is this your only debt? Yes. It's your only debt. And so technically the way we look at it is like this. If the HELOC is more than 50% of your home, then it would go with Baby Step

6 when you pay your home off. But if yours is less, which it sounds like it is at $32,000, am I right? Yes. Then it would roll into Baby Step 2. And so for that reason, and for those listening, Baby Step 2 is paying off all your debt except your mortgage. And so for that reason, I would do that. I would drop this down. I'd knock out this heloc and then that frees up again that extra money for you to build up that savings even faster how much do you make uh about 90 000 a year good awesome so if you used the majority of the savings it would knock down the heloc to five grand yes and then you could knock that five grand out within a few months it sounds like correct i like that plan i don't know how long you plan on needing to work until but i want you

to retire with some dignity and getting rid of your debt is going to be your best option do you still have a mortgage i do my mortgage is about 140 Okay. So if I'm Michelle, I'm going, hey, by 60, I want to be completely debt-free. What's the plan to do that right now? It's getting rid of this HELOC the next few months. Then it's restocking the emergency fund to six months. Then it's going to be, I'm tackling this mortgage. I'm going to tackle, you know, 30 grand a year for the next five years and knocking this thing out by the time my 60th birthday we're going to celebrate because I'm 60 and I'm totally debt-free. Are you currently investing at all? In my 401k at work and I'm at seven percent so as soon well I just I just paused my, what's the word?

Contribution? I just paused my contributions, yeah. Good, good. That frees up $525 a month. I'm sorry? That's going to free up over $500 a month to throw at the HELOC. Right, so that's why I paused it starting February 1st, so I could put that towards it and then build up my emergency. That was my other question.

My emergency fund, since I'm single, should that be three months? Should it be four months? Should it be six months? I like six months. Listen, after COVID, I am always in the camp of six months. No one ever regretted having the six months. And so especially with you being single, single income, there's just more risk. When you have two people with a stable income, there's less risk. So you could lean towards three, but in your situation and stage of life, and you got all the home repairs, I'm going to go six months. And that might take you, on average, it takes six to 12 months. I think you'll do it faster. You'll do it closer to that six month range. I do too. If you can start throwing, you know, you free up the HELOC payment and this extra 500 bucks from investing, you're going to be able to get this thing stocked up in no time, Michelle.

I also think when you, I think you're at an advantage when you're single, kids are out of the house, there's nobody else to get in the way of what you're trying to do is what I'm trying to say. So I think that you can go as quickly as you want to go and get as intense as you want to get. And that's kind of exciting. I love it. Thank you for the call. Up next, we have Timothy in Washington, D.C. Timothy, welcome to The Ramsey Show. Hi, George. How are you? We are doing great, my friend. What's going on? Well, first of all, I'm just going to tell you that I'm the blind guy that called into your show on the Smart Money Happy Hour, I think it was,

or the special show you did when your book was released. Oh, yes, the live stream Q&A we did. That's right. You were saying how great it is to have a wonderful audio book to listen to because you're unable to read the hardcover. It is. It's wonderful, and the sound effects just added so much fun to it. I was laughing all the way through it, listening to it.

That means the world. Here's my question. Thank you so much. So here's my question. So I'm a single man, 30 years old. I'm on the brink of having a fully funded emergency fund saved. I was aiming for $12,000, but after listening to your book, I thought, better raise that to $15,000 just to be safe, because rent and utilities, worst case scenario, top a little over $2,000 a month. Rent alone, $1,700, $1,725. And considering

the apartment I'm in and the rent I'm getting, I'm actually doing pretty well. Apartments around here are running $2,000 or more a month. Anyway, I'm trying to save up for a down payment on a house. And based on my current income, gross salary, about $80,000 a year, net take home after insurance and taxes, not including retirement, probably about $55,000 a year, that after my housing and utilities and groceries, I'll probably be lucky to save maybe $20,000 a year, which means about seven to eight years if I want to go for a 20% down payment. And even townhomes in this area or Alexandria, Virginia, I've checked online generally start at half a million dollars. So a hundred is the minimum I'm aiming for. And I was just wondering, is there a more efficient way that I could get there or is this about the best we can do? Great question, Timothy. Well, you've been doing great so far and you're at that home stretch with the emergency fund,

which puts you in that baby step three B. So you're thinking through this the right way. Okay. The most you can save right now is 20K. If you've done that budget and you're going, hey, there's no other expense to cut. Then the other side you need to go to is how do I make more? How do we get that 80K in DC up to 100K in DC? Even if right now that's through a side hustle or consulting or freelance, anything you can do, because that's all just going to be gravy to get you to 30K saved. That's a different equation. Now, 30K, five years, putting 150 down on a $500,000 condo or townhome. Now we're cooking with gas. Absolutely. And I have been doing some, I'm a music teacher on the side outside of my

federal government job. So I do do a little music teacher on the side outside of my federal government job. So I do do a little music teaching on the weekends. Problem is I've had a hard time finding students. Now, one thing I did do is on my Facebook page, I recently posted on there that I am a private teacher to my friends only. Because believe it or not, I've gotten some phishing scams from people. Oh, you've got to be careful. Listen. Jump in some Facebook groups locally.

That's a great place to start, but in the meantime, hop on Instacart, man. Make you $1,000 extra a month. That's $12,000 a year. Add that with the $20,000 you're already saving. I mean, that's how you make headway. Do something until you can do the thing that you want to do. Yeah, and check out that Margin is Breathing Room chapter in the audiobook, Timothy. That's going to help you. I got lots of ideas for those side gigs for you there. This is The Ramsey Show.

Welcome back to The Ramsey Show. I'm George Camel, joined by Jade Warshaw. Open phones at 888-825-5225. Listen, George, before we go further, I, listen, I clowned myself on that last call. I clowned our guy, Timothy, because he's blind and I suggested Instacart. That was horrible. Oh boy. I dropped the ball. Timothy, my guy. I made a mistake.

I'm sorry. We need to come up with some side hustles that will work for you because the truth is instacart didn't work for everybody so let's george let's hit him with the list of things that he can do and timothy accept my apology i'm sorry my guy it was an innocent mistake jade i'm sorry we've all been there and uh this show is live and on the internet forever so i apologize for that that's just the nature of. Listen, y'all can come for me in the comments. I'm ready. I deserve it. They've come at you for less stuff. So just be ready. So I'm going to just go through a list of things, not just for Timothy, but some ideas that anyone can do. And obviously if you've got any kind of disability, it's going to add a

challenging layer. Yeah, that's a fact. But what I hear in Timothy's voice is he's willing to do whatever and he's an overcomer and he's not scared of work. Oh, 100%. Those are the biggest factors to me. And so I don't know if there's any groups, Facebook groups even for those that have disabilities or for those that are blind to where he can jump in there and hear from others and hear how they've dealt with side hustles and bringing in more income because he's doing music teaching. That's true. That's a great one. If you can do that from your home, think about other things you can do from your home. There's a lot of at-home jobs out there. One thing that anyone can do is just sell stuff. It is amazing how much crap we have sitting around and how much people are willing to pay for your crap. Because guess what? At one time,

you were willing to pay for that crap. Let's be honest. It's a loop. That's right. So sell it on Facebook Marketplace. And guess what? If you want it later on, you can buy it again from Facebook Marketplace for about the same price. So flipping stuff is also something I've seen a lot of people do successfully. Yes. Some turn into a full-time business. Yeah. They'll go and buy something for five bucks that they'll research and go, I can sell that for 50. 100%. And make big profit. So that's another thing people can do. Of course, Jade, you mentioned Instacart. There's a lot of delivery type apps, Amazon Flex for packages, DoorDash and Uber Eats for food. And so if you have a vehicle and you're able to drive, you got a driver's license, you're old enough, then that can be a great option to go make money.

Tax withholdings, Jade, is a weird life hack to get more money back in your life. That's right. Oh, anybody can do that. If you're getting a $2,400 refund, you can change your withholdings and get that $200 a month back in your life. And now's the time of year to do that. It's the beginning of the year. Get the full effect. Don't think that was a gift from the government. Pausing investing is another way people can free up money in their budget. We're hearing all these calls and we go, hey, how much are you investing? They go, 7%. It doesn't feel like much.

And I go, that's $600 a month that could be used towards your debt and your goals and down payment. Babysitting, house sitting, pet sitting, dog walking, all of these, you can easily make $15 to $30 an hour. And, Jade, now that I have a daughter and we hire babysitters, I'm like, should I become a babysitter? I'll stay home and watch this baby for 30 bucks an hour. With these rates? Okay. I know that's right, George. It's crazy. House cleaning is another one that anyone can jump into. If you're not scared of other people's dirt, I mean, you go in there and start scrubbing and mopping and wiping down and dusting. It's amazing how much money you could make for one house. Listen, I don't know what I would do

without the person that cleans our home. So thank you so much, Chelsea. Whether it's full-time business or side hustle, it's a great way to do that. Indoor, outdoor home maintenance and repair. I mean, if you are remotely handy, I'm talking about my handyman said, I go to this wealthy neighborhood

and people hire me to go change out a light bulb. Yeah. And they either don't have the ladder, the know-how, the confidence, the time they're, they're older. Yeah. Whatever it is, you'd be amazed if you just put yourself out there. Um, car detailing is another one anyone can get into. It's these everyday tasks that people don't, they don't want to do. Like I was out the other day, uh, this was in the fall. So there was a lot of leaves out and the kid was scooping up leaves and putting them, you know, in the paper bags and I was like hey can you come over here and do that in our yard just because out of the out of convenience so there's so many jobs that you can do that is

convenient like if you can think of something that would make someone else's life more convenient chances are you can make money that's what it's all about and so those are just some ideas to make more there's tons of ways to spend less we We won't get into that today, but you got to be doing a budget first and foremost to actually make a plan for this. Otherwise it can disappear real quickly. But some jobs that anyone can do from home, especially those with maybe disabilities, there's a lot of cool like translator jobs. There's, depending on your skill that you already have with your career, Timothy's working for the government. So I wish we'd get him back on the phone and go what is he doing currently what is that skill set how can he offer that outside of there and private music teaching is a great way most people don't charge

enough i mean you can you you're coming from the music world you at least at the very least need to be charging a full dollar an hour if you're not you're i mean 60 minutes is 60 bucks starting yeah yeah and then you need to very quickly be charging $100 and then $150 an hour. Well, and depending on the kid and the skill level and your skill level, you can really, I mean, if people are taking this seriously, parents are willing to pay. The last voice lesson I took was $200 an hour. I took the lesson. Wow.

And look at you now. One of the best voices I've heard. There it is. So there's a lot of things you can do. A lot of gig websites out there like Fiverr and Upwork and Freelancer. Editing, proofreading, writing. There's a lot of things. Now, I wouldn't mess with some of these dinkier ones.

People are like, should I take these online surveys for tents? I'm like, some of that's just not worth your time. Yeah. Listen, I know a lot of people who are doing virtual assistant jobs. Yes. And that is like they're making major bank. Customer service jobs too. Just answering phones, helping walk people through stuff. who are doing virtual assistant jobs. Yes. And that is like, they're making major bank doing- Customer service jobs too.

Just answering phones, helping walk people through stuff. There's a lot of jobs out there. That's right. So just some ideas. Again, I would, depending on what you're able to do and your skillset,

you just got to get creative. Get the old juices flowing. Sometimes people turn it into their full-time gig. Yeah. I think that's how a lot of people's self-employed business starts, is they start with something small that they like, that they're good at, that's a convenience for other people. And because they're good at it, it just starts to grow and there's a need for it. And I, you know, that's how it starts a lot of times.

Yeah, well, especially from the music world, we're both musicians. And so I'm thinking about Timothy, there's room in the licensing world. I mean, if. And so I'm thinking about Timothy, there's room in the licensing world. I mean, if you just license your music for TV, films, weddings, that's what I used to do, Jade, as a side hustle. And my biggest hit was Ford used two of my songs on their YouTube channel. And I got an email, they're like, hey, they don't have much budget. Are you okay with $3,500 for them to use these songs? And I was like, let's go. I think that will do. Yeah, I can, that's fine.

Yeah. Or a lot of times that instead of paying for the licensing rights to use an actual song, they just want you to make kind of like a Bobo cover of it. Yeah. Like I remember my husband, remember that Sly and the Family Stone, Everyday People? Oh yeah.

I am everyday people. My husband, they went to my husband toyota and said hey will you make a bobo version of this make us like the great value yeah so we don't have to paste line the family stone to use their song wow listen he's got a plaque in his office for it isn't that crazy that's impressive that's crazy with the plaque i like that a lot jade yeah there's a lot of things people can do and you just got to be willing to do it because most people they want to just sit on their couch and just make 50 bucks an hour. Listen, everyone wants to sit on their couch. What are you willing to do that other people aren't? That's right. Get up and go, you know,

kill something, drag it home. And so that's where I look at skill set. I had a bajillion side hustles when you and Sam were paying off debt. Listen, I had about a dozen. Yeah, you got to get creative, figure out what you like to do. I sold cupcakes and cakes and wedding cakes and things like that. And me and my husband love animals. So we trained dogs

like we learned how to train dogs and then we went out and got clients and trained dogs. So like whatever it is that you like to do. But I have to say this

because it's worth saying no side hustle takes the place of a core income that's not measuring up. It must be on top of. Yes. place of a core income that's that's that's not measuring must be on top of yes because if your core income like for instance you know i talk a lot about the side hustles that sam and i did but the real issue was our income like your when your income is just so low yeah you've got to work on that as well and find a long-term plan to get that up because the

the the fact is you're not going to want a side hustle for life and you're not going to want that to be the way your life looks long-term. So there's two sides of that coin. My funniest side hustle was, have you heard of Nielsen? You know, they do like the ratings for TV and media. They had one called the Nielsen People Meter. So I signed up for this. They give you a little beeper that's listening to the media you're listening to and that affects the ratings of radio and shows and music and so i did that jade i turned on my little beeper and i put it in my pocket and i get a check for like 20 bucks a month that's like wrapping your car you know get your car wrapped and you have to drive around with you know poncy attorneys at law but listen for 500 bucks a month for a season you can do anything yeah it's easy. For 500 bucks a month for a season, you can do anything. Yeah, it's easy. The problem is, Jade, I couldn't fit that little beeper in my skinny jeans.

Had to upgrade my pants. But hey, what are you willing to do for a short season so that you never have to do it again? What are you doing to live like no one else now so later you can live and give like no one else with pure freedom and you can look back at those side hustles with a little bit of laughter and have a good story? That's right. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Camel, joined by Jade Warshaw.

This is your show, so give us a call, 888-825-5225. And if you are enjoying this show, I hope you are, would you be a doll and just hit the share button, hit the follow button, leave us a kind review wherever you're listening. You guys are the greatest marketing plan we could ever have. And the show is free and what I'm asking you to do is free. Just take some moment of your time. Just text it to a friend. Hit the subscribe button. Let the algorithm know this is the kind of content America needs right now. That's right. That's all I'm asking for. All right, Michael is up next in

Sioux Falls. Michael, welcome to The Ramsey Show. How are you doing? Good. Hey, George and Jay, thanks for taking my call. Sure. So I have two sons, one 16, the other 17. They're both in high school working part-time jobs. They are using every dollar to budget every month, and they're doing a really good job for saving for vehicles. My 17-year-old has paid cash for two separate vehicles. Wow. Yeah, so he's working really hard. The problem is the savings accounts they have are earning 0.01% interest.

Yeah, that's right. They're earning more, and they're even talking about investing, but I don't know. They're both talking about going in the military, and I don't know if investing is the right option now, if they should be looking at a money market or a high-yield savings account, or what they can do to better maximize the savings that they have

so that they have a little bit more available to be able to apply it towards school or a vehicle or any other expenses. Great question. And I applaud you as a father for raising some bright young men. We need more of that in today's world. Yeah, thank you. So let's separate this out. So there's savings and there's investing. So let's talk about savings first. Savings is for your emergency fund and for short-term goals. So they need to be thinking out a year from now, two years from now, three years from now, what are the expenses we're going to have that we'll need to cover? Maybe that's first month's, last month's deposit on rent.

Maybe that's upgrading car. Maybe it's a maintenance fund for the car with a sinking fund. And outside of the emergency fund and those kinds of savings goals, long-term is when we talk about investing. That's more of like the five plus year horizon. And I think both are good things to start coaching them on and get that muscle kind of, get those muscles built. And so you're right, on those savings accounts, you can do way better than 0.01%. And right now we're at record highs in savings accounts with, you know, four or five plus percent in a high-yield savings account.

So I would move their savings there and help them open one of those. There's some really great ones. I don't know. Can they open one for themselves, Jade? I'm trying to think if it's custodial still until 18. 17, I think, is still custodial. Like a minor? Yeah.

Okay. I think your name would still have to be on it. Okay. So I would definitely move their savings to high-yield savings account. You can have them do a starter emergency fund.

I mean, these guys are about to be adults real quick. And so having a few thousand bucks saved is great. Beyond that, since they are,

you said they're working part-time, they have earned income? Yeah. I would also help them start funding a Roth IRA, and that's not tied to an employer. That's an individual retirement arrangement is what that stands for, and you can work with a SmartVestor Pro on that. You can reach out to one of those folks on our website, RamseySolutions.com.

There's also DIY options through like Vanguard and Fidelity, but that's a great way. I think There's also DIY options through like Vanguard and Fidelity, but that's a great way. I think it's 7,000 for- 7,000 this year. Is the contribution limit. And so they can contribute up to 7,000. If they made 7,000, they can contribute up to 7,000. And if they made more, it's still 7,000, but you can't contribute 7,000, but you only made 4,000. Sure. Would it make sense for them to follow the baby steps and do the 15% at this age, or because they have additional funds, they should just go as close as they can to maxing it out while still having the emergency fund or doing some of that other savings?

I think it really depends, kind of like what George laid out with those other short-term goals. Do they have education expenses to cover, for example? Yeah, I wanted to ask about that. On the horizon, what do you see for both of them as far as educational expenses or even living expenses, whether it's rent or... Because that's going to inform a lot of this as well. Moving expenses? Who knows?

So right now, they're both talking about going into the military, and if they do that, it'll be four to six years. And so all those living expenses, everything else will be covered. Their health insurance, they won't have any of those expenses. If they don't, my 17-year-old is talking about going to like a trade school. Okay. And so the expense won't be nearly as much as the four-year. So although if they do the military route, that's four to six years where it's covered, that's also four to six years where they can be stocking away money for a down payment when the time comes.

And so, and also, you know, kind of blending what George said with what you're saying, if you did choose to start helping them put money away, you could also think, okay, maybe down payment is the next thing that we're going to do. Because when we think about the baby steps, because you said, can we apply that to them? Baby step three is getting three to six months of expenses saved. For them, that's going to be something very minimal. So maybe they've just got some money set aside and it's there. But if they start saving for a down payment, that's something because the horizon is six years from now, you could throw that in an index fund and let it grow for the next six to seven years or more until they're ready for it. If you're not quite ready to get into that retirement building phase with them. Perfect. So you've got options.

And you can do that in a non-retirement account. That's right. Like a taxable brokerage account and just put that in some index funds for the next, you know, four, five, six years as they're in the military. I mean, that's going to, that could, with compound growth, you know, it's going to start to take hold after a few years. But their savings rate right now is really the, is what's going to be the ticket. Yeah.

That way they can get to it if they want to, and there's no penalty associated. All right. Awesome. I really appreciate it. Absolutely. These are fun conversations to have when it comes to a 16, 17-year-old, bright-eyed, bushy-tailed, no debt. It's amazing what parents can do to set their kids up for financial success.

Yeah. Instead of the hacks I've been seeing on social media, Jade, which is you should get a credit card and add your three year old as an authorized user so that when they're 18, they have an amazing credit score so they can go out and get as much debt as they want. Parents, do you understand how dumb this is and here's what happens most of the time the parent ends up making terrible financial decisions and tanks their kids credit score accidentally when the kid's 18 they got a 500 credit score i'm like if you do if you're gonna do anything just take 50 or 100 bucks and just set it aside in a brokerage account for them if you're gonna do like you just set some money aside why's it got to be attached to credit well your toddler being an authorized user is the real wealthy hack jade

it's what the wealthy people do drives me crazy oh gosh okay let's get to karen before i have a moment let's get to karen karen how you doing she's in green bay i've been better um so great to talk to you guys thank you sure i have a 2016 2016 Kia Sorento and this week the, um, the, what is it called? The, um, head gasket blue. So I, I owe 10 on it. Excuse me. I owe 11 on it. Okay. Um, I can either sell it for an offer. I've gotten up to $6,500 for it. I'm getting around $6,500 just to sell it as is. Broken.

With the known problem. Is that to a private party? Correct. Okay. I can fix it for about $6,700. Or I'm also exploring trading it. I know you're going to say no to that. Trade it in and try to, you know, get

a new car that On payments? Yeah. Girl! Here's what would happen. You trade it in, the dealer gives you like $2,000 for it. And then you're taking on another $20,000 and you're going to increase your debt instead of get rid of it. And they probably will sell me a car worth, they'll charge me a few more on the card.

Karen, you already know that's not the move, so we can check that one off the list. You need to stay away from car dealerships with a 39.5 foot pole right now. Do you have any money? Do you have any money saved? Because you mentioned getting the car fixed. I have like a little emergency fund, five grand. Okay. Okay. For this kind of a thing.

So you almost have the money. If you sold it for $65,000 and then you took, you know, the other $4,500 to cover the difference, you could pay off this car, but that would leave you carless, of course. Right. Are you single? Then where do I get a car? I'm married. I work from home,

and a friend's been helping with driving my kids for sports and stuff. So you guys have another car? My husband's pickup. Oh, okay. So could you go down to one car for a season? Just briefly while you save up $2,000 or $3,000. And then by what? Just get a beater and this is temporary and then

when you get another couple thousand, you add to it because here's the thing, when you buy a $2,000 or $3,000 car, it's not going down in value anytime soon. It's already taken the major hits. So just upgrade it little by little until you get to at least $8,000 or $9,000. And then that's how we walk up this ladder of buying a car in cash.

I would also go to a bunch of mechanics and get bids for this. Because online on RepairPal, it's about $1,600 to $1,900 for this repair, not $6,500. So I'm not saying that, but look into that. you