The Ramsey Show - App - My Mom Took Out 5 Credit Cards in My Name...What Do I Do? (Hour 2)

Episode Date: January 21, 2022

Debt, Saving, Home Buying, Budgeting, Education, Relationships As heard on this episode: Sign Up for a FREE trial of Ramsey+ TODAY: https://bit.ly/3rZTUAx Tools to get you started:  Debt Calculator: https://bit.ly/2Q64HME Insurance Coverage Checkup: https://bit.ly/3sXwUn5 Complete Guide to Budgeting: https://bit.ly/3utmVXi Check out more Ramsey Network podcasts: https://bit.ly/3fHhbVE

🎵 Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where America hangs out to have a conversation about your life and your money. I'm George Campbell, your host, joined today by Ramsey personality, Dr. John Deloney. It's a free call. Phone lines are open, 888-825-5225. You give us a call, and we will talk about whatever you want. John is a wealth of knowledge, and I'm just here for entertainment. Should be a good time. That's a low entertainment bar and a really low knowledge bar.

But it's Friday. Dave's gone. He's probably golfing. And the calls are free. That's right. You have nothing to lose except time. Exactly. We've got plenty of that. And a couple of brain cells. Give us a shout. All right. Let's see what Rob has to say in Philadelphia, Pennsylvania. Rob, welcome to the Ramsey Show. Hey, how are you guys? Great. How can we help today? I'm in the middle of

babysat too while also saving for a wedding. And I have a car that's fully paid off that I paid $16,500 for, and it's now worth $19,500. So I was thinking of selling that, using that money to finish off the wedding savings, which is only $3,000. And then I wanted to attack my student loans with the rest of that, but I wasn't sure how much to save for another car. How much do you have in student loans? $26,000. And you need to save another $3,000 for the wedding? $3,000 is left to save for that.

How soon is the wedding? It's in December. Oh, okay. You've got plenty of time to save. Bro, save your money and keep your car, dude. Really? Convince me otherwise. The car, here's the thing. When it comes

to selling the car, it's not going to create any cash flow because you don't have a payment on it. So it's not going to make you money except for what you get for it. And you're still going to have to go buy another car in this market, which could be, you know, $8,000, $10,000, right? Right.

Which leaves you with $10,000 after all is said and done and all the effort you're putting into selling this car. So the question is, can you save up $10,000 and avoid having to sell the car quickly? What's your income? $50,000. Okay. And what do you have in debt total? Is it just the student loans or is there something else? No, just the student loans. Okay. And what do you have in debt total? Is it just the student loans or is there something else? No, just the student loans.

Okay. Well, do you know if your fiancé has debt? She's debt-free. Awesome. Well, making 50K, you're going to easily be able to save up the 3K for the wedding, right? Right. We'll put that in savings. Are you guys paying for this all on your own?

A third her parents, a third my parents, and a third us. Okay. And she's chipping in some and you're chipping in some here? Your part is $3,000? Yeah. That's left? Okay. I think you can save up for this wedding and then go hard on the student loans until the wedding happens.

What is it about this car you want to sell it? I was just thinking that would be the quickest way to get the student loan out of my life, and then I could just get by with a cheaper car for now. Do you have a cheaper car in mind? No, but I was looking, and it seems like the floor in this market is like $3,000 to $5,000. Everything's up now. Like a Fred Flintstone car this market is like $3,000 to $5,000. Yeah. And everything's up now. Like a Fred Flintstone car with no engines, $3,000 right now.

Pretty much. Here's the thing. I don't have a problem. If you want to sell a car, you don't want it anymore, and it's going to clear all of your debts and whatever, and you can go get a car that's going to get you from here and there. That's not going to hurt my feelings. I like the...

Go ahead. Yeah, my other thing is that I work from home now, and I don't really use the car as is. Okay. Yeah, well, then sell it then, man. Sell it. I mean, like George said, you're not going to be solving a long-term problem, but I do understand the impetus

to feel like I could expedite it next year of my life, pay off my student loans, go into my marriage debt-free, get the $3,000 for the wedding. Yeah. Yeah, I mean, if I'm in your shoes, personally, I would sell it. Yeah, I would too. Because I don't care about driving a nice car.

My car costs $6,000. I've driven it for five years now. I have no real intention or urgency to get a new one. And I just tried to sell my car to George off air for between $4,000 and $8,000. Making deals. We're not car guys. So, I mean, I love the hustle from rob here wanting to get the cash wanting to pay down this debt quickly and really setting yourself up for some amazing

success in marriage when you guys start this thing off debt free if you can do that so i'm all for it but there's no fire where i'm going dude you got to sell the car so it's your decision either way and if it's going to give you the motivation to get rid of this debt fast then i'm for it final answer just know what you're trading. You're going to be trading a $17,000 car or $20,000 car basically for whatever you can scrounge together for eight to 10 grand. It's a good question. Congrats on the wedding, man. Amber joins us in Indianapolis. Amber, welcome to the Ramsey Show. Hi, thank you for taking my call today. Absolutely. Yeah, I just have a quick question.

My husband and I got married last year, and we're sitting at like baby step four. We're both in our early 30s, and we're kind of getting the mindset of preparing financially for kids in a house within the next few years. But we've both only rented and never actually owned a house. So we're trying to get ready to prepare for a down payment and save for that. But a savings account and a CD just, they feel stable, but not necessarily a lot of room for growth. Sorry, you're cutting out, Amber. Speak directly on your phone. That's okay. Sorry about that. So yeah, you're saying you want to see some growth here. You don't want to just park it in savings and watch it move at a half a percent. Yeah. And I looked a little bit

into Roth IRAs and saw, you know, obviously, you know, there's the tax part of it where you're not necessarily getting taxed on withdrawals, and there seemed to be an exception for first-time house buyers to take, I think, up to $10,000 in earnings. And you could also take contributions out. But just wanted to get your guys a sense of if a Roth IRA is a beneficial way of doing it and also getting that growth, especially if we're looking to purchase within, let's say, the next three to five years. Okay. Well, I would not recommend saving up for the house in a Roth IRA. That is a retirement vehicle, and there are just better

options out there. One would be an index fund. That's a simple way to save up for a house that's going to grow and you can invest in some great index funds there. And when we were saving up for a house, we worked with a smart investor pro, we put our money in some good growth stock mutual funds, and that really helped us for those few years that we were saving up. So if you're talking to three to five year timeline, I'm totally good with you investing that money. And if there's any urgency of, hey, we need to do it in three years, then I would say, hey, you might want to look for a safer solution, like a high yield savings account. But if we're talking three to five years and you've got some wiggle room there, I would be parking it in index funds or mutual funds in just a taxable account,

not a Roth IRA. Yeah. Think of it. I like your analogy, George. Think about it like maybe at the beginning of the year when people were struggling to find rental cars and they would just go get a U-Haul box truck and drive it across country to wherever they were going instead of renting a car. A vehicle will get you there. That's not the right vehicle. Yes. Right. It's uncomfortable. The chances of things going sideways, it's just not the right car. Yeah. And you can invest in the same mutual funds that you would in your Roth IRA. There's some great options out there that will still give you a 9%, 10%, 11%, 12%. We're seeing some great returns, obviously, lately in the market, and that could change. But if you've got a three to five-year

time horizon, the roller coaster at the end of the day will still have trended up. But if you're telling me you want to do this a year from now, well, we could see a down market a year from now, and you've lost money, and now you're trying to get this house. But if you're telling me you want to do this a year from now, well, we could see a down market a year from now and you've lost money and now you're trying to get this house. But I love the spirit of you guys wanting to make sure that you're doing this wisely. And the best way to do it is with index funds or mutual funds. And you can get connected with a smart investor at RamseySolutions.com and they can help you get all of that sorted out. Great question. This is The Ramsey Show. Most people know me as the guy who did stupid with a lot of zeros on the end. I made my first million dollars in my 20s the wrong way and then went bankrupt. That's

when I set out to learn God's ways of managing money and developed the Ramsey Baby Steps. By following these steps, I became a millionaire again, and this time the right way. After three decades of guiding millions of others through the plan, the evidence is undeniable. If you follow the Baby Steps, you will become a millionaire and get to live and give like no one else. My new book, Baby Steps Millionaires, is now available for purchase. When you order my new book, you'll learn how ordinary people built extraordinary wealth and how you can do it too. I'll walk you through how to invest, build wealth, and bust through the barriers preventing you from becoming a millionaire. Baby step your way to becoming a millionaire. Get your copy today

at RamseySolutions.com. That's RamseySolutions.com. There is a lot of hype going on in the real estate market right now. Buyers are feeling the pressure to buy and to buy right now. And with all the talk about interest rates going up, buyers are frantic to lock in now while rates are hanging out in the 2% range. Don't get me wrong, rates probably won't get any cheaper than that, but that doesn't give you the green light to do stupid, as in buying before you're debt-free or with a zero down payment, or offering way over asking price and waiving inspections. Stuff like that is high risk and always costs you in the long

run. It's easy to get caught in the hype, but get your head out of the craziness for a second and look at the facts. Are you debt-free? Do you have a down payment of 10% to 20%? Can you afford home ownership? A mortgage, insurance, taxes, maintenance? If and only if your answer is a big fat yes to all of those questions, does it mean that buying a home is a smart move for you right now? Once you've answered those questions, it's time to look at some cold, hard numbers. And one of my favorite tools is our free mortgage calculator tool at ramseysolutions.com slash freetools. You can see exactly what your home ownership options are based on your budget.

Even if you're not there yet, start dreaming, figure out what those numbers are for you. You can go to ramseysolutions.com slash and click on freetools and check out the mortgage calculator. Open phones this hour, 888-825-5225. Ken joins us in Seattle, Washington. Ken, welcome to The Ramsey Show. Hey, Dr. John and George. How are you guys doing today?

Doing great. How can we help? Yeah, I wanted to run by a home purchase question for you guys. Oh, perfect. I was just talking about this. My wife and I were thinking about having another child, and so we're looking for a bigger space. And that part's pretty straightforward. The income part is there's a tiny wrinkle there. I work in big tech,

so about half of my income comes through the form of equity and stocks. They're granted to me, but they don't vest month to month. Sometimes they vest maybe once a quarter. And so my question is, I just wanted to run through some numbers with you guys to see if this upcoming home is stupid or if it makes sense. This is a fun game. Let's play. Hit us with the numbers. Okay. So right now, the home that I live in, it's about 1,600 square foot. It's fully paid off, and it's worth around $900,000. Fantastic. The home that I'm looking to purchase is going to be around 3,000 square foot, so a little bit less than half or double the space, and it's going to float around $2 million.

Okay. The income is $500,000 a year. $250,000 of that comes through the form of equity and so for me i feel a little bit uncomfortable going 15 years i was thinking the monthly uh the mortgage is going to be higher than 25 of my take-home so one idea i had was working a 30 year just to lower the monthly payments but then at the end of the year, dumping all my equity right into the principal and trying to pay off the house in about four years, even though I'm having a 30-year mortgage. What is driving the urgency right now? Like how long could you wait technically before jumping into a new house? Well, we're thinking about trying for kids probably in the summer.

So that's probably the biggest factor. It would just be a little cramped. We could still make it work, but another few years also, that prices are going to go up. Sure. And your house would go up too, so they'd move together. Walk me through your equity plan. It sounds like it's more of a bonus structure than an equity plan.

Or do you sell your equity every year? Yeah, so how big tech works is for your compensation, there is stock that is awarded to you. You don't pay a dime for it. It's not like an employee purchase program. You could sell it right away if you want. Or if you hold it, it can potentially grow. The company that I work for is a publicly traded company. It's been around for 20 years, and the stock grows at about 30% a year. So I've been holding onto it,

and I can sell it anytime, essentially. So I, George, and push back on me, I don't want to consider that take-home pay. So if you're making $500,000 a year, you get $250,000 in cash to take home. Let me take it out of big tech and give you an example. So when I worked at one of the universities I worked at, part of my package came with a salary. And it came with a home because I'm on campus in the middle of the night 24 24 seven, three 65. And it also came with my kids could go to college for free. Okay. Or at some discounted rate. When I put that on paper, my total compensation was, was robust, but I couldn't count that in my, I can't send that IOU to my electric bill, right? Or to my mortgage company. So I've

got to sit down and look at how much cash am I getting every month? You see what I'm saying? So I get the total compensation. I wouldn't factor that into my home purchase price, unless you want to go ahead and sell what you've got and liquidate it and have a million dollars. I don't know how much equity you've built up in the company equity. But if you want to sell that now and cash it out, I mean, I guess you could do that. But do you see what I'm driving at? I think so. Yeah. Just a fear of losing your job and then not having those stocks actually invest. But if you have a paid for $2 million house, we were not really worried about stocks at that point. So I'm wondering how much stocks could you sell off right now?

How much could you make? I have about $750,000 worth of stock, but based on the trend that it's growing, that can easily blossom to a million by September. And in big tech, it could easily go to $250,000 by September too. Is that fair? I don't.

I mean, based off the trends for the past five to 10 years, it's Amazon. So it's been doing great. Okay. Okay. Yeah. I mean, I understand that. I'll give you Amazon. But you know, when you're, you're asking us, should I take out a million dollar mortgage? And the, I can't in good faith tell you to do that even with your amazing income. But if you're saying, Hey, you know what? I could sell off 400, 500 grand in stocks to where it would be 25% of my take-home pay on a 15-year fixed. That's what I would be doing if I was in your shoes. I would be saying, what's the least amount of stock I can sell off to where this is the right financial decision for my actual reality take-home pay? Does that make sense?

Yeah, that does make sense. And I think the part that I've probably left out is I have 20% saved in cash right now, so $400,000. And I was going to sell this home and put that all towards the principal. So I wasn't going to hold that. Oh, you'd have 1.3 to put down. Well, now we've got a whole different equation because now you've got a $700,000 mortgage with $250,000 a year salary. Yeah, just in cash, yes. Right. Yeah. I still would play around with that calculator and make sure that it's 25% or less so that you know you have the margin to pay this thing off early, which you're going to be able to do and you're going to be a multimillionaire if

you're not already, which is incredible. So you've done really well. I just want to make sure that we don't step into a decision quickly and you go, oh my gosh, I can't breathe. I got a million dollar mortgage right now. I would sell off just enough stock to where I could get it under 25% and then aggressively attack that thing. So 25% is kind of the baseline, no matter what. It's the ceiling essentially. Exactly. Yeah. I mean, if it's 25 and a half percent, we're not going to yell at you. This is a guideline. We're not trying to be fundamentalist here. I just want to make sure that we make a decision that's right for your future and not just for your present. And this is going to set you up in an amazing way.

No, it's, yeah. Congratulations. How old are you, Ken? 34. Holy crap. Wow. My man is crushing it. Way to go, Ken.

And again, George, it sounds, when we tell somebody who's making that kind of money with that kind of return that the principle still applies, like even though the numbers get to be monopoly money, that the principles still apply. We say this all the time, but math is math is math is math. And I always go back to my mom worked for Enron dude and it was the Amazon of the day it was the biggest company it was massive it was doing all that stuff and then one day it just didn't exist is that rare of course it's rare um but when you've got a fully paid for 900,000 basically a million dollar house you got 400 grand in the bank like man take your time and do it right and don't get over creative the thing I want you to recognize here man uh ken is you're gonna have to make a concession on one of these things you can't get

all of the growth and buy make a super safe smart purchase and you're gonna have to concede on one of these so it might be i'm gonna concede a little bit of the stock and the growth that might or might not happen for what i know is to be a safe purchase to put me and my family in the best long-term position and look at it this way. If you had $500,000 cash, would you go, I'm going all in on Amazon stock? Probably not. Exactly. So that tells me I'm okay selling off that much to make sure that I get into this house and there's no financial stress in our family, only financial peace.

But way to go, Ken. 34 years old, multimillionaire. I love to hear that. It's awesome, man. This is The Ramsey Show. Thank you. This is The Ramsey Show. I'm George Campbell, joined today by Ramsey personality Dr. John Deloney, and we are taking your calls. Phone lines are open.

The number to call is 888-825-5225. Rafael joins us in Palm Springs, California. Raphael, welcome to the Ramsey show. Hey, how are you guys doing? Doing great. How can John and I help? Good. So I had two questions. So the first question was, I wanted to know how not having a credit score would affect your interest rate on a mortgage. And then the second question has to do with building a house over buying a house. So my wife and I, we live in California right now. We're looking to move out of state within a couple of years and we're looking to move to like Oklahoma, Tennessee, Missouri, something like

that. Somewhere where it's kind of cheap to buy land. And so we were wondering if it's better to buy a house already or to save up money and to kind of just go through a home construction process when we finally find where we want to live. Well, there's pros and cons to both. I'll tell you, me and John have vastly different experiences. He bought some land. He's got a house. I did new construction in a suburban neighborhood here. And so very different experiences. I like the new construction process, uh, number one, because it gave us built in time to save up because you lock in the house for a certain price and then you still have, you know, six, eight, 12 months while

they build it before you close and have to pay up. And so I like that about it. I do like that you get to choose the fixtures. And so if you guys are very particular versus having to gut a house, when you get in, you say, I hate the cabinets. I hate the carpets. I hate the paint. I'm not a DIY get to choose the fixtures and stuff you guys are very particular versus having to gut a house when you get in you say i hate the cabinets i hate the carpets i hate the paint i'm not a diy guy john is you know america's chip gain so he doesn't mind doing all that chip gains is america's chip gains but so and hey i hate the idea of building something that that makes me i've built residence i mean built buildings in part of my other jobs. Not single-handedly. Yeah, yeah, yeah.

I've been a part of the process with architects. Man, I'd rather just move into a house that I love. That's just me. And if we have to do some DIY stuff at a house, I love that. But yeah, in Georgia, I'm just different, so it's a personal preference thing. So on that side, there's pros and cons to both. You've got to stay on top of the builders. There's going to be issues.

There's going to be things they do wrong, and so you have to babysit. It's like a part-time job to follow the construction process and make sure you're like a project manager in that regard. So there's nothing wrong with either, but you guys have to decide what's right for you guys. And on the credit score side, I actually did the manual underwriting process on this home. And I had the same question as you, because a lot of people that push back on our plan, they go, well, you're going to get a terrible interest rate. And I actually asked the lender. I said, how does this work? If I do manual underwriting, the no score loan, how does that affect the interest rate?

And they said, well, based on your financial situation, if you have a good down payment, we basically treat your credit score as good. And I just did a refi on my house and did the same process and got a stellar interest rate. And I have no idea what my credit score is. I haven't even looked. So it's a myth that your interest rate is going to be a lot higher. Now, could it be a quarter of a percent lower, higher? I mean, yes, there's variables in here. But living without a credit score is not as hard as people make it seem. I had a great

experience with mine. There wasn't a ton of extra paperwork involved. It was a pretty seamless process. And Raphael, you asked a question about whether you should buy a house now and save up money to move later or to just save up your money and rent now. Walk me through that question one more time. Oh, no. We're planning on moving out of the state. So we live in California right it's we're planning on moving out of the state so we live in california right now we're planning on moving to a different state and wait why would you leave california just kidding go ahead you know it's it's absolutely perfect here but you know no but um do you know where exactly you want to be because that's my only thing is i would choose it more based on location and do we have kids and where's the schools at and where's all

the shopping because we want to be around the action i would base it more based on location and do we have kids and where's the schools at and where's all the shopping. Cause we want to be around the action. I would base it more around that versus are we going to buy new or, or, uh, you know, preexisting home. Yeah.

So it's not necessarily buying new. It's all, I guess buying new in the sense of the construction part of it. But, um, it's more so my wife wants to have like a house that she wants to have as opposed to buying a house for all this tons of amounts of money and then, you know, having to fix everything how she wants to have it. You know, so she was thinking just going through the new construction process and that way getting to customize the house exactly how she wanted it to have.

Yeah, my wife was the same exact way. She wants to choose the fixtures and the flooring and what does this look like. And, man, I'll tell you, I never – my brain was racked trying to choose grout color for, like, the seventh room. And I was like, I don't even care anymore, man. It was just so many details. Linoleum, baby. Yeah. Roll it out. But either way, it's good.

But, again, this sounds like a personal decision for you guys, and it sounds like you're leaning towards new construction so that you do have more flexibility. But you might look around and go, we found an awesome house that we love as is, or we just need to paint one room and we're good. So do your research and make sure that house is well under your take-home pay so that you guys aren't underwater. But from California to Tennessee, man, there is freedom and money. I love it. All right.

Ryan is on the line in Jupiter, Florida. Ryan, welcome to The Ramsey Show. Thank you, guys. Nice to talk to you today. How are you guys doing? You as well. How can we help the line in Jupiter, Florida. Ryan, welcome to The Ramsey Show. Thank you, guys. Nice to talk to you today. How are you guys doing? You as well. How can we help? We're good, man.

Well, this may sound like a silly question, but my wife and I are both retired. We're totally debt-free, cars, house, everything. But we have this habit of three or four times a week we go to our favorite coffee shop, which has stores worldwide, and I drive up, we order our coffee, I go to the drive-up window, they scan my app, and they give me my coffee. And after so many cups of coffee, I get a free cup of coffee. Am I doing this right, or should I pay cash? Well, there's a simple framework for this, and I'm going to just go ahead and guess you're talking about Starbucks. Well, yeah.

Okay. Okay, they have like the most per capita in Florida, so that's why I guessed it. We're on to you, Ryan. I do the same thing, and here's the easiest way to look at it. Is it in the budget? Do we have a coffee budget because we love coffee and we're just going to say we're going to go three to four times a week

and we planned for it, or are we letting the rewards drive our spending decisions that's that's the difference we have to parse out because truthfully that free cup of coffee it's what two bucks i mean i don't know what you're ordering a fancy latte no i just kept off that a boy right i had had a habit of that a few years back in the old Ramsey building. I would stop every day on my way to work, and it was budgeted for, and I would get my grande black coffee for $2.61, and you better believe that was in the budget. And so as long as it's planned for, you don't have to feel guilty about it,

and the rewards, you're not going into debt for this coffee. So there's no guilt around the reward system, but don't let that drive you to go, well, I'm going to spend $20 at Starbucks so I can get a $2 cup of coffee. So there's no guilt around the reward system. But don't let that drive you to go, well, I'm going to spend 20 bucks at Starbucks so I can get a $2 cup of coffee. You know what I mean? My other side of the question is,

you know, I can download money into the app. Should I use my credit card or should I use my... Hold on, hold on. Ryan. Ryan.

You're using a credit card. That was a stupid question. You let the cat out of the bag. Your debit card, yes. Just load it up, man. I mean, it just works the same. Yeah, what I do is I keep enough on there, and then if I don't have enough money for my next purchase,

I reload it with another $10. But I'm not going to preload it with $150 either, you know? Yeah. But if you want to preload it with whatever's in your budget, you save $50 in the budget this month for Starbucks. Load it up, man. Load it up with $50, and if you run out, sorry, time to make some coffee at home. In fact, I can see that being a great way to control overspending there, right?

I'm going to put my coffee budget on this prepaid app, and when it's gone, it's gone, right? I like that. I'm with that. That's a great question, though, because there's still the mental game and the rewards and the gamification. This can drive us to make some poor financial decisions well i could see somebody who said okay i'm going to get rid of my credit card with points because i don't want to live the points game and then go oh but i'm getting coffee points over here is that okay and one of those you mentioned it one of these is going into debt with the promise i'll pay you back in 28 days this one is dude this is your money and if you

just keep being a repeat customer we want to throw you a little cup of coffee every once in a while I'm not even really paying attention to if my rewards are at the point where I get a free drink once in a while

I'll go oh okay my wife's getting a fancy drink let's go ahead and use the reward that's another thing take advantage of that if I get the free reward it's good for anything

at Starbucks so I make the craziest drink possible just to make the baristas mad I'll do eight shots I'll take every pump of whatever you got. Give me the fanciest, most expensive oat milk you have back there. I'm like, cool, that'll be $9.

I'm like, sweet. I'm using my reward. Zero. I don't ever make baristas mad because they control your life. That is true. That is very true. I'm not that racist. Treat your baristas.

But Starbucks has a range. You can either get a $2 drink or a $9 drink. You get to make the choice. I tend to go to the cheap side, John. You know me. That's me, too. You can either get a $2 drink or a $9 drink. You get to make the choice. I tend to go to the cheap side, John. You know me. That's me, too. You know me. Black coffee will do.

I'm there for the caffeine. I just get water from the hose out back. Now, Ken Coleman, he likes a white chocolate mocha. I'll have you know, America. He's a fancy man. I love it. Good conversation. Not one that anyone needs to have, but we had it anyways.

This is The Ramsey Show. I'm George Campbell, Ramsey personality and host of the Fine Print Podcast, joined today by my friend, I think you'd call me a friend, Dr. John Deloney. Most days I do. Most days. Today is that day. And we are taking your calls. It's a free one, 888-825-5225.

Melissa joins us from Fort Worth, Texas. Melissa, welcome to The Ramsey Show. Hi, thank you for taking my call. Absolutely. How can John and I help? Hi, so I recently was looking at my credit score, and I noticed a couple of credit cards that I didn't know about. There were five of them. And the only person that I can think of that has my Social Security is my mother. I confronted her about these cards. She confirmed that she took them out. I was not aware of any of this.

So I'm just calling to kind of just get some advice on, like, what I should do about this situation. Yikes. What's your relationship with your mom? We're really close. Not as close as you thought. I know, yeah. So I just, yeah, I just found out a couple weeks ago and so just kind of figuring out what was her what was her reasoning from

for violating your trust like this from stealing from her daughter um she told me that they were kind of struggling with money. And at the time, like, my credit score was actually, you know, decent. And so she was just used, like, those credit cards that you get in the mail type of thing. She just kind of applied to those the easiest way. Did she have any kind of addiction? What is she spending all this money on? She was just saying she didn't, didn't really in the moment i didn't ask exactly why i was just kind of just hurt by the situation um but um she was just saying that she was in a

really bad place and just was really struggling financially and that's what she did um so melissa i'm not going to talk bad about your mom. I will a little bit, but I'm going to talk more about this full picture here, okay? Okay. Your trust and the sanctity of your Social Security number was stolen from you and compromised. A crime was committed. You got that? Yes.

And I know that's hard, but your mother committed a crime, and you are the victim. Yeah, no, I definitely, yeah. This would be such a major trust violation for me because it was done behind your back with full knowledge that they were stealing from you and um there's two people on the planet that can't ever do that and that's mom and dad right yeah yeah so if i'm you i would go to the social security number office and change my number i would tell my mom this is a major trust violation major and it's going to cost you a bunch of of mess and if you have to pay for it i would tell her because you have i've lost your trust and i have to go do this i'm asking you to pay for any of the fines

and fees or whatever it's going to cost to change my social security number i would let my mom know you cannot have this and if there's any sort of, then the next step is I'm going to file a police report. And I know that sounds really rough because that's your mom. You've got to understand that you are simply responding to a crime that was committed and not like being ugly to your mom. Your mom started this and now she dropped this in your lap and you have to create the boundaries and deal with this yeah right and i know that's so hard because you thought you had a good relationship with your mom you're gonna have to grieve that relationship because it's not what you thought it was yeah and i hate that for you it's okay um it's hey hey no it's not it's not okay because i get how i mean i'm just thinking if i was to

show up and do this i can't even wrap my head around how heartbroken i would be if i found out my mom had done this yeah it's a big deal that's kind of what i've been processing that's right melissa you also need to go ahead and freeze your credit with all three bureaus so that no one including your mom can open any kind of trade lines with your name and social security number. That is your A1. Do you currently use a credit card? Yeah, I currently have one. And so it was like recently and kind of new at looking at my credit and stuff.

And so when I saw the cards, I was just like, whoa, I almost have one. And when I saw the others, I was just like, whoa, I almost got one. Yeah. And when I saw the others, I was like, yeah. That's actually a great point, George. I would pull my credit. Is there any other charges? Like is there a home equity loan taken out with your credit card, or is there other lines of credit taken out?

Oh, no, no, no, no. With your social security? Yeah, I started looking at everything else. Now it's just, it's five cards. Okay. How much debt is on your account now? All the cards collectively is about $6,000. Okay.

Well, she needs to pay that off, whether that's giving you the money because you have access to the account. That's probably the safest way to do it. But I don't want these lingering, going to collections all under your name on your record. So you've got some cleanup to do.

Does she have the money to pay you? That's what I... I had a conversation with her about it. I told her that I want her to pay for all this. Not I want. I personally don't want to. I feel like I shouldn't. No! No! You're not paying a dime of this.

No. I would tell her, you have 60 days to get $6,000, or I'm going to have to make a police report because I've got to go get a new social security number, and I've got to file on my credit report that these are fraudulent charges. That's what I would do. Yeah. That's a firm boundary, and that your mom will say, oh my gosh, you're going to do that to us? We're struggling?

Yes. Because if you'd asked me for $6,000 and said we are broke and we are starving, you might have been able to help, but you stole from me. You stole from me and now you changed the relationship boundaries here. So yeah, I'd give her a deadline. I didn't even think about that, George. I'm sorry. I missed that. You've got to, yeah, she's got to pay this back in this timeframe. And then we're, we're, we're changing directions here. Yeah. I mean, it's either she pays up or there's legal ramifications because you're not touching that. Yeah. Cause then she's going to go, Oh sweet. That was a free six grand. I just got on my spending spree. Yeah. She's going to go take out a car loan cause the car's going to break and she'll just get a note, but honey, she'll pay there's no end to to where this thing ends because she's got your number she's got your

ticket and it's going to be a pain to go change your social security number across all of your different forms and this is and that and that's the world you're in and i hate that for you but it happened yeah tough situation all right let's go to kevin in denver kevin we've got time for a quick call here. What's your question? Hey, guys. Thanks for taking the call. Quick question for you. So I did an estimate with our tax guy just to prepare for taxes.

We've been blessed, and income has been going up. We think we're going to have about an $8,000 to $10,000 payment for our taxes. Um, and so obviously that'll be finalized once we get all our forms and everything, but that's our estimate. Um, we're in our last debt of baby step two, um, which is about 30,000, uh, to pay off original budget, have that plan to pay off by end of April. The question is, the plan I have is to stop making payments on that until I have about eight to 10 in the bank, just preparation for tax payment. We're disciplined enough to hold that money. We're not going to spend it, but I just wanted to get your guys' take on, is that the right thing to do? I don't want to be in a pickle,

obviously, for that tax bill. Yes. IRS debt is at the top of the list when it comes to your debt snowball. And so this is your new priority is to get this thing taken care of because you don't want the IRS after you. So I would make it a priority to save up. And if you need to file an extension, whatever you can do to buy yourself time in order to do this and not go over any of the deadlines, that's

what you need to do. And make sure you're working with your tax pro to go, how can I avoid ever having a $10,000 tax bill again? Yeah. But I love that idea. If you and your wife are disciplined enough to hang on to that $8,000 to $10,000, I love the idea of pausing it, stack up that cash, and hopefully it comes back and it's only $6,000 and you can dump the rest towards your debt.

But that's a great idea, I think. Yeah. And be conservative. Park more than you need for now. And then, like John said, you can throw the rest of the debt. Continue on with the debt snowball. But, man, that's a tough situation. It's tax time, people.

Tax time. Get this stuff taken care of. Hey, by the way, it's in April, so start now. Yeah. You know it's coming. Start now. You know it's coming. That puts this hour of The Ramsey Show in the books.

Our thanks to Ben Hill running the board today, Austin Selby, Screen of the Phones, and Kelly Daniel, our producer. We will be back with you before you know it. Until then, spend wisely, save intentionally, and give generously. Hey, it's Kelly, associate producer and phone screener for The Ramsey Show. If you would like to do your debt-free scream live on the show, make sure you visit theramseyshow.com and register.

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