The Ramsey Show - App - Normal Is Broke—Don't be Normal!

Episode Date: October 27, 2025

🤔 ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Can an online will work for you? Take this quiz to find out!⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Rachel Cruze and Jade Warshaw answer your questions and discuss: “I feel swindled by my whole life policy – I was relying on it for my retirement and I'm lost...” “Is it worth it to take a loan out to buy a more expensive car?” “We are $287,000 in debt and we keep blowing through our baby step 1 emergency fund. Should we increase it?” “I’m going to be laid off in January, what should I do?” “How do we stop feeling guilty about our plans to buy a home?” “How do I overcome my mentality of holding on to money instead of paying debt?” “How do I tell my girlfriend that I lied about my financial situation?” “Should I stop investing while I am saving for a down payment on a house?” “Can we withdraw $2k/month so I can stay home with our kids?” “How do we navigate job loss and a high-risk pregnancy?” “How do we get out of mobile home hell?” “Can I quit my job and become a stay-at-home father?” “Which pension payout should I choose?” “Should I be paying off my student loans while I’m in college?” Next Steps: ✔️⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠Help us make the show better. Please take this short survey.⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ 📞 Have a question for the show? Call 888-825-5225 weekdays from 2–5 p.m. ET or⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠send us an email⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. 📱 ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Get episodes early in the free Ramsey Network app! ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ 🎅 ⁠⁠Hurry—Your chance to win $5k is almost over! Enter the Ramsey Cash Giveaway today!⁠⁠ 🏠 ⁠Get organized and prepared to buy or sell a home. ⁠ 💵 ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Start your free budget today. Download the EveryDollar app!⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ 🛡️⁠Protect yourself with trusted insurance coverage that fits your budget ⁠ Connect With Our Sponsors: Stop paying more and start shopping smarter at ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ALDI⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Get 10% off your first month of⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ BetterHelp⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Go to ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Boost Mobile⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ to switch today! Go to⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Casper Sleep⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and use promo code RAMSEY to learn more. Learn more about⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Christian Healthcare Ministries⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Get started today with⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Churchill Mortgage⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Get 20% off when you join ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠DeleteMe⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Go to⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ FAIRWINDS Credit Union⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ for an exclusive account bundle! Debt collectors hassling you? Take back control of your life at ⁠⁠⁠Guardian Litigation Group⁠⁠⁠ Find top health insurance plans at ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Health Trust Financial⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Use code RAMSEY to save 20% at ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Mama Bear Legal Forms⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Visit⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ NetSuite⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ today to learn more. For more information, go to ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠SimpliSafe⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Get started with ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠YRefy⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ or call 844-2-RAMSEY. Visit⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Zander Insurance⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ for your free instant quote today!  Explore more from Ramsey Network: 💸 ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠The Ramsey Show Highlights⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ 🧠 ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠The Dr. John Delony Show⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ 🍸 ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Smart Money Happy Hour⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ 💡 ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠The Rachel Cruze Show⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ 💰 ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠George Kamel⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ 🪑 ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Front Row Seat with Ken Coleman⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ 📈 ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠EntreLeadership⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Ramsey Solutions Privacy Policy⁠⁠⁠⁠⁠⁠⁠

Normal is broke and common sense is weird. So we're here to help you transform your life from the Ramsey Network in the Fairwinds Credit Union Studio. This is The Ramsey Show. And I'm Rachel Cruz hosting this hour with personal finance expert and good friends. Jade Warshaw. So we're answering your questions. You can give us a call at AAA 825-5-2-2-25. All right, starting off, we have Nick in Kansas City. Hey, Nick. Welcome to the show. Hi, how are you guys doing? We're doing great. How can we help? So I've had a life insurance, I believe it's a whole life insurance policy that my dad had started for me in about 2008. We've been paying about $500 a month.

into that policy since then and I was looking at it with my representative and I only have about 150 in there but I've had it for so long that I don't it from the research I've been doing it feels like I should have been should have never done it but it seems like it's mostly front loaded and so I don't know if I should stay into that pull that out, put it into something different, and also what I could do, what kind of products I could explore now that I'm making more money than way back in 2008, what I should be putting my money into. I've kind of decided I want to start a Roth IRA for my wife and I, and then I have some extra money after that, and I wouldn't know where to go after that. So you said the cash

value is only $150K. What's the death benefit? Only $500. And how? How much did you say you've paid in? $500 a month. Oh, my gosh. Since 2008. Yes. Oh, my word. Yeah, I mean, I'd get almost 18 years.

Yeah. I try to get out of it immediately today. Yeah, for sure. I mean, these are, it is, it's one of the worst financial products. Honestly, that's out there. I mean, when you look at Whole Life or Universal Life, it's so crappy because what you're seeing is exactly what people experience because they're trying to mix an investment with insurance and you never end up you never get ahead you really don't and so versus if you had taken a

you know um you know just a a policy that yeah a term policy that's so significantly cheaper and getting as much coverage i mean if you're a healthy young guy you're you're only gonna pay 20 30 bucks a month like it's not a lot and if you had invested that remaining amount just in a mutual fund or in an index fund or a brokerage account like what it would have been with the market So I think, I'm sorry to say, Nathan, yeah, I feel like you're experiencing the, the crappy product that whole life insurance is. And if you were to get out of it, is your next question. Have you researched doing that? Because different companies, I mean, there's different holdings and fees and all of it.

Have you looked at, you just went ahead and cashed it out? Yeah, a little bit. I have, and I, I'll be honest, that's why I've called you guys, because I am so confused about the penalties, the, I just, I'm so confused. I feel like I've made a lot of good decisions in my life, but this is one horrible one. Yeah, I would call them today. I mean, obviously you're going to lose the death benefit because you're canceling the policy, but some of that cash value should end up rolling to you minus fees. So I would call and find out exactly what that is. And then once you feel good about the information, yeah, just cancel it because it's not serving you. If you had taken that

same money and invested it just in an index fund. It would have been more than double by now. It would have been closer to $300,000. So I think we both agree that that wasn't the best way to invest that money. And then if you're looking for coverage, yeah, then they just go to term coverage instead. Yeah, I would contact Zander, Nick, Zander insurance, because they'll shop their mortgage. They basically shop companies to get you the lowest rate for a term life. And I would go ahead and do that. I would do a term life before you cancel the whole life just because you have a wife. Do you have kids? Yeah, I have two kids. Yeah, so I would make sure before you cancel the whole life policy, get a term in place. Again, it's going to be very inexpensive. You and your wife both need a

policy. And yeah, do that, then cancel the whole life. And once you get that cash out, like what is Jade's saying is then you can start applying it actually to invest. That's actually going to make you money. Now, when this was purchased, was the intent to build wealth or was the intent for insurance purposes for life insurance what was the intent it was the intent well my dad did it with one of his uh friends and he was he's been paying for it for most of the time i did i worked for him for my father but i didn't actually uh i mean i wasn't making a lot of money until maybe 2017 and since then it's been everything's been great but the insurance was just to make sure that after I was married and that all anything that I

had debt wise was going to be paid off yeah so that's that's a good word to the wise um when you're purchasing insurance it should just be that it doesn't have to be married with any other sort of investment thing insurance is insurance investments are investments they're separate uh deals there and so just knowing that going forward I mean it's a really good call and a really good question because I think people get caught up in whole life all the time. Yeah, so the next step, Nick, when we're talking about investing, do you guys have an emergency fund in place?

Yes. Okay. So... Probably too much. Probably too much is what you said. You're just covered, Nick. You're just covered. Covered it all the way around. Like I said, I've made a lot of good decisions in my life. Sure. But my retirement is not one of them.

Okay. So then we've, let's be looking at that next. Yes. So the Roth IRA you mentioned, yes, absolutely. And your wife, even if she's not working, she can open up a spousal, Roth IRA. So I would do those two as well. I think the limit this year, if you get it all in place, is $8,000. And sometimes it changes year to year. But you can, yeah, fully fund that if you can, I mean, for this year, which would be amazing. And then be looking into, do you have a 401K at work?

My wife has a 401K. Okay. I do not. You do not. Okay, perfect. So just as a household, you know, you want to be investing 15% of your job. your income. So I would do those Roths first. Then your wife needs to be looking at her 401k and go ahead and go up to the match as well, which you guys can do both. Yep, that's great. And then anything

beyond that, you guys can continue to throw money at her 401k. If it's a Roth, that's a great option. And then some people, you know, want flexibility outside of retirement. So you could look into other options like, you know, an index fund, a brokerage account, a mutual funds. But all of those, again, they're not going to have the tax advantage like retirement. So we would say 15% of your income needs to be going straight into retirement. So that is 401k's Roth IRAs. And then anything above that, once you guys pay off your house and everything, you can look into some other options, which I feel like you guys, I mean, like you said, you're smart. I mean, you guys have made some great decisions so far. It's just this whole life policy sucks. And I feel like you're feeling

the repercussions of that. Okay. Awesome. Well, thanks for the call, Nick. I appreciate it. so yeah you guys if you if you're looking at life insurance again term life is the way to go it's so inexpensive Winston I just upped ours again I think it was probably three years ago and we had someone come to the house because you got to do all your health stuff you know to prove all your health and yeah and we get it back I'm like oh my gosh because we even upped the amount we went ahead and up the amount of what we're and it was so inexpensive yeah it's not if you're healthy yeah it's not a lot yeah it's not bad yeah so if you're able to do that you guys so worth it and again Xander insurance is a great place it's the place Winston use to shop our health insurance because they shop multiple companies it's not just looking at one company they're looking all all over to get you the best rate possible so yep so nick that's what i would do for your family and anyone else listening it's official the ramsie christmas cash giveaway is here. So each week, someone's going to win $500. It's a lot of money. It's a lot of money.

And then the grand prize winner will win $5,000. So you can enter every single day from now until December 20th. And you can enter daily to increase your chances to win. Go to Ramsey Solutions.com slash giveaway now to enter. No purchase necessary to win. So again, $500, gosh, every single week until now until Christmas. Making your full-time job to apply. Yes, I know. And then the grand prize of $1,000. All right, let's go to Matthew in Dayton.

Hi, Matthew. Welcome to the show. Hi. My question is, is it worth taking out a car loan to avoid being in a never-ending loop of cheap cars and insurance payouts? And I can give some backstory on this if you'd like. Sure. Yeah. So I just got married 22 days ago.

Congratulations. My wife has had her. Thank you. My wife's first car, she had for three years, and it got totaled at the end of the summer and we got $5,000 payout for it. When you say it got totaled, did she hit somebody or somebody hit her? She avoided being in a pile-up, and by avoiding them being in a pile-up, she went into a ditch, and the ditch broke the frame.

So better the car than her. Yeah, for real. So that got totaled, and we bought her dad's car for its same price of the insurance payout because she was on her parents' insurance at the time. So it was $5,000 for her dad's car. And then this past week, actually, last Tuesday, we came home, and a tree was on top of her car that she just bought in August from her parents. And now that car is being totaled for around $5,000.

Okay. So I guess... Okay, so it's not crappy cars breaking down, Matthew. you. You could have wrecked it. She could have gone into a ditch in a nice car. A tree could have fallen on a nice car. It's bad luck. It's not the car's fault. You're not saying that the transmissions keep breaking and you're paying more than the car's worth and fixing it. So no, so your argument, well, keep going. Do you have a better argument? I don't think so. With insurance, they're just, these cars are so, these cars, the first car was

over 10 years old and this car. Now we just got told us 10 years old. So insurance isn't going to pay to fixed body damage or anything like that. They're going to give you what it's worth. What it's worth, yeah. Right. So I just, if I just buy another car for the same cash value of what it's worth, that's going to put me another spot of if that car gets in an accident or something happens, I'm just going to be in another.

Right, but nothing was wrong with the car to begin with. You're staying lateral, which is fine. You didn't call in saying, hey, I've had these $5,000 cars and they're just breaking down left and right. You called saying, she avoided a pile up, a tree felt. Lightning could hit the next car tomorrow, and then they'd pay you out another $5,000. The car is still not the issue. I think the issue is you just want a nicer car, and you're hoping that this can give you an excuse to get one.

Okay. I haven't thought about it from that perspective. I have. I think that's what you want. I mean, can you tell me anything other than kind of like these bad luck situations? I mean, like I feel like the argument would be. The argument would be much more convincing, Matthew, even though you can't convince us to take out a car payment, because what you're going to spend on a car, the interest and all of it,

it's not a good investment. You could talk to majority of financial experts out there that may not agree with us on credit card points or certain things. Almost everyone agrees that a car payment is the worst type of debt you could probably get into because you're paying interest and you're paying more on something that's going down in value. And so that makes no sense versus a house, right? You go and you pay interest on a mortgage. Well, at least, for the most part, houses are going up in values, slowly fast. I mean, all of it. But over time, a car goes down. Like, people call this show when they're like, hey, I went and got a car payment for $26,000 and now it's worth $20,000. I mean, almost all the time people are underwater

in cars. And so that's because they buy too much car. They buy a car they can't afford. And it goes down in value, and they can't take the financial hit. They don't have the money to be able to even, you know, absorb that. That's right. So, so, you know, you'll get this next $5,000 payout and you'll go get another $5,000 car. Now, if you had some extra cash you wanted to put with that and, you know, you're out a baby step too. I'm not mad at that. What baby step are you on?

I'm not sure. We have about thousands. I haven't looked at that exactly for baby steps. We have about a thousand in an emergency fund. Okay. Good. But we just, we're paying off our wedding and our honeymoon. We have about 2,000 left on a credit card.

Okay. Okay. How much is the wedding and honeymoon? pay off we have about 2,000 left paid it was probably about a $40,000 wedding and about $6,000 honeymoon okay but you only have 2,000 left to go yeah okay good so we would call that baby step two so in the land of baby steps there's seven of them the first one you have which is to have a thousand dollars saved just between you and life and then the second one yeah you pay off the debt smallest to largest it sounds like you're doing that and how quickly can you get this

$2,000 paid off. Ideally, within the next month. Okay, great. And then after that... Paychecks end, because we're living within our means and saving money where we... Any student loans or anything, Matthew? Any other debt? Yeah, she has about 9,000 in student loans.

Oh, okay. They ran her junk folder and the mailings of miss payments for going to her old house, and that was a whole whole thing of she forgot about. the loan, and she needed, it was quick, and she needed to stay in school. Is there anything else besides the 9,000? No. Okay. So everything but the house is baby step two.

How much you guys making total together, Matthew, you and your wife? 70 take home. Wonderful. Okay. Combined. Yeah, that's great. How old are you guys? Well, she's 23.

I'm 22. Okay. So she turns 24 if you're in two months. Okay. And I'm just kind of calling in as a. a husband of like, well, we've already had to do car searches the last two months and have to deal with all of that. My main thought was if I take a $5,000 loan or something like that. It's not going to change what happened. You're still going to have to do car research if another

tree falls on the car. If you bought a $50,000 car in cash today, if a tree falls on it, you're still going to have to replace it. And they're still going to give you the value of the car. So I want you to let go of that. I want you to let that out of your Kung Fu grip because for some reason you think that getting a more expensive car, it's going to change. The tree is going to be like, hold on. Yeah. Hold on. We can't fall on a Mercedes. It's a suburban. I'm going to fall this way instead. It's like those commercials. Mayhem. Yeah, yeah. I know. Mayhem follows you no matter what, my guy. I know. I know. Yeah. So, Matthew, I mean, you guys, you guys are doing great. I mean, you really are. And I just want you to shift that mindset. If you start to entertain debt,

then it is the easiest road to go down because there are. people and companies that are wide open, willing to accept you and make you feel great and justify any way to get you in because they're going to be making so much money off of you. That is the industry. Okay, that is the industry. And so when you can avoid that, and you guys are so young, and I'm so I'm like, please, if you can just avoid that, you guys together and you make a pact and say, we are not going into debt. So we're going to pay cash for our cars. If we have to go on an anniversary trip next year, we're going to save up and pay for it. Like when you can avoid it and you guys are making $70,000 and you get out of debt

and all of it, like you guys are on the positive end then financially. So don't continue to have these thoughts of debt because it just constantly will financially take you more in the negative. And it takes away from your net worth. It takes away peace of mind and all of it. So if you can, and I would implore you to consider just living debt-free. And it's not exciting. The ego is not going to love it.

We don't love the $5,000 card. It doesn't make you feel great. And it doesn't make you feel successful. Yes, but for a season. That's for a season. And then you guys can save up cash. Sell the $5,000 car for $5,000 because it's probably what is still going to be worth. That's right.

Put it with another five. And that's a $10,000 car. And then you do it again and again and again until you guys are, yeah, at cars that you love, but you're paying cash for them. And it's going to be a slower process. But, man, so worth it. Gotcha. I needed to hear this because I grew up in a family where you didn't buy.

cart. We always bought cars for cash. That's the same way with her. And we were just kind of in a pickle of like, we just keep doing this. Yes. Yes, you do. Yes. I needed to hear that. For sure. Yeah. Your parents have set up some great examples. Both of you come from a very similar background. And so stick with it. That's why we always say, you know, normal's broken. Common sense is weird when we open the show because that's what's happening. So live within your means, Matthew. If you don't have the money, don't buy it. Don't be under that impression that if I can afford the payment, I can afford it. No. You have to be able to pay. for things in cash.

In Atlanta, Georgia, we have Joel coming up next. Hi, Joel. Hey, there. Thank you for having me. Yeah, absolutely. How can we help today? Hey, so me and my wife have a new six-month-old daughter. Oh, congratulations.

Thank you so much. We're about $287,000 in student loan debt, and I'm trying to figure out the best way to tackle this. So we have the emergency fund, but we recently had a car repair, and that shipped that out pretty quick. And so I guess I'm asking, are there times in which the emergency fund should be bigger before you start hammering those student loans? And then I guess the secondary question is I'm looking at the, you know, income-based repayment compared to these large amounts that we're paying on student loans, each month. I just kind of need a little bit of guidance here. Yeah. What did you get, what did you get your degrees in? My wife is a nurse practitioner, pediatric. And she went to Emery, so, you know, and I'm a film and video editor. And my student loans are only about 30,000.

Hers are about 250. How much is she making a year? Right now, since she just graduated in December, she's making about 70. And I am also making about 70. We're making about the same amount right now. Okay. And she just had a baby. And she has crazy. Yeah, yeah, yeah. Is she going to be going back to work, making more than 70? Like, is that her plan? Yes. So she has started back to work already.

And that's kind of where she is at now. Hopefully over the next few years, obviously that increases that she can take on more patience. But that's kind of, we're trying to operate with what we have now and trying to look forward to the future, you know, how do we prepare for possible other cars and all that sort of thing you're not doing any kind of investing right now are you um i do have a 401k at work that i've been um that i stopped contributing to last year while we were moving having the baby and all the things early this year and then i started again okay but so i think you need to pause that because right now if if what you say is true and you're interested and serious about paying off this debt then that means you

need every piece of money that you can get your hands on and that includes right now just for the time being pausing that investing and trust me you'll get to it later I'm like you my husband and I had $280,000 in student loans and we paused investing and it was just a short period of time but it really does give you the ammunition you need

to knock out the debt a lot faster how much when you guys get your you know your check that net amount how much is it every month we bring in about 8,000 total like among both of us each month and most of that goes out with bills, daycare, because, you know, she were both working.

Right, right. And then also the student loan debt or the student loan payments on hers were about $3,000 a month. And I was like, you know, for the 10-year plan. So I took it back down to the 25-year plan. That gives us a little bit more breathing room. Uh-huh. Fine. But once again, not enough to save for a car and all the things.

So I'm not mad at, I'm not mad at you taking advantage of taking it down to the 25-year plan to lower the payments on all of them. But only with this caveat, if you take all of that. extra money that it saves you and put it on the smallest debt. So do you have any debt besides the student loans? No, that's our own debt. And the student loans, I'm guessing, are broken up into smaller student loans. It's not just one big one for two. Right. Exactly. So if you make it, if you do the plan, that's the 25 year plan, and let's say it drops it down to, what's the payment now from 3,000 down to? About 1900. Okay, 1900. Now you can take that extra $1,100 and you can throw it at the

smallest student loan at the principal. Do you see what I'm saying? So it's giving you more firepower to knock that smallest one out first so it's not getting eaten away with interest. Does that make sense? Yes, absolutely. But should we take a few months first to save up a little bit bigger emergency fund now? How much is in there now? Well, it was at 1100 this morning, but I had to get a repair on one of our cars and now it's at like 400. Okay, so stack it back up to a thousand. We found over the course of years, 30 years doing this plan, that $1,000 is the sweet spot. It's just enough that if something breaks down with the car, right? Rachel, you can pop in there and get it fixed. But it's also, it's not so much that it's taking away from the momentum of you paying off the debt. It might feel

like not a lot, but, you know, your wife's already had the baby. The baby's healthy. You guys are home. Child care is paid for it. Like, you can take that moment in exhale and say, okay, like the risk or the danger is over. $1,000 is good. And then, yeah, if you clip, $1,900, if you clip that other $1,100 at that student loan, you're going to pay it off a lot sooner. And think about how much more you can add to it. So this is probably you doing some overtime, probably now's not the time for your wife to do overtime with a baby. But getting that number up as high as you can because ultimately you guys are going to be the ones that say, okay, if we do it at a rate of $1,100 a month extra, here's how long it's going to take. We're not satisfied with that.

So let's see if we can get it up to $2,200 a month extra. are we satisfied with that? Do you see what I'm saying? And reverse engineer that number to get it where you want it to be. Yeah. And Joel, I mean, this is, it's a lot. I mean, $300,000 of debt. Like, this is going to be a long game for you guys, right? I mean, this is a long journey. So your wife, you know, she's in a career where the upward trajectory is massive. I feel like I'm like in that medical field, I would be depending on her in a sense of like, Because, I mean, you can do extra work 100%. And I would. I would be taking on extra. And I am. I do freelance.

That brings like 600 a month. Yeah. You can do a lot. That's awesome. Yes. So for her long term, and when I say long term, I'm saying five to eight years, I'm going to be making as much as I can. I mean, because to your point, I mean, she went $250,000 in debt for this degree. And so the upward trajectory of her having a bigger shovel over time is probably going to be more possible.

And that's what's, I mean, I, I mean, I. And I'll just be frank with you, too, Joel. I'm like, I mean, Jade and I are both moms. So I'm like, that feeling, especially your first. Is it your first? Yes. I mean, it's just, I mean, I think I cried every day going in for a little bit. Oh, I know.

I tried more in the past six months than the rest of my life. I mean, it's so emotional and it's so exhausting. And this is not to like pick on you guys, but it's just another example. A real life example, literally, of you, Joel, in Atlanta with your wife and what debt is freaking doing. where if, you know, in a perfect world, if there was no student loans, and we had an 18-year-old girl call in because she wanted to go to a private school in Minneapolis that was going to cost like $250,000 to get an undergrad degree. And we were like, don't do it. Don't do it. Because you want options, right? And if, and if your wife wants to stay home, it's like, it sucks now. Could you guys choose that? Absolutely. And then it'll take you maybe a lot longer. A lot longer to get out of debt. But what sucks is that like the debts that she, you know, that the student loans are in was in a field and at a school that was very expensive and again hopefully she has the opportunity to be making more um i mean that that's the goal right if you're going to be going to be going to be going to be sufficient you know that's going to be

sufficient with the income you're making um right exactly but it just sucks you know what i mean because there's not it limits options on what you guys want to do in life so again that's not to pick on you it's just another example of what debt does it takes your freedom and it takes your options and it sucks so so would you so even with a baby 1,000 you would say is a good round number. I think it's just as a father, you know, it's like, I'm, I'm a little terrified. Well, you got to think about it like this. What you're saying makes sense. I, like, logically, I hear what you're saying, but think about it like this. Let's pretend, let's imagine the, the worst thing that could take place, which would be, uh, like the worst emergency.

I don't know, something with your roof. Maybe. Right. Right. And let's pretend that cost $3,000 to fix. Well, you've got your emergency fund, but then you've got your actual income. And remember you're putting an extra you're paying extra on your debt every month so if you said if i have my emergency fund and i stop the extra that i'm paying on my debt for that month just to cover whatever crazy thing could possibly happen and if i pulled back you know the purse strings a little bit more i'd tightened up a little more i could probably find another five six hundred dollars so you see that there's actually money there you're just not you're taking it out of the mix in order to pay debt but it's there if you were to meet it you see what i'm saying thank you for that

So you think stay far away from the IBR and the IDR though, right? The IDR, like I said, the IDR doesn't bother me, especially if you were moving it from the 10-year plan to the 25, that doesn't bother me, but only with the caveat that you're going to use the extra money to pay off the debt. If you use that money to go out to eat and just inflate your lifestyle, then you are only playing yourself. And I can't stress that enough. No, that's a great point. Yeah. And I think, you know, with a lot of things, too, whether it's medical bills or that kind of thing, you usually have a month or two to be able to, you know, I don't even mean to pay. So sometimes it's not like an immediate expense. Yes, this moment we have to. Sometimes you have a little bit of time to your point that you can get that cash back. But I get it, Joel. I know that like mama bear mentality of like I just want to be smart, keep everyone safe and all the things is so good, so true. But that $1,000, that emergency fund stays true no matter what.

Except we have Michael in Boston. Hi, Michael. Welcome to the show. Hi, how are you today? We're doing great. How can we help? Doing well. So I have a question for you.

I was just informed a few weeks ago that I'll be getting lay off at the end of the year. Oh, no. My wife and I have, yeah, it's all good. My wife and I have about $100,000 in cash right now. I'm just trying to figure out what I should do with that in these uncertain times. Okay. What do you do, Michael? Michael? I work for a large corporation. Okay. Okay. In product management. What were you making?

I was making $160,000 plus a 20% bonus. Okay. And does your wife work at all? She does. Yes. And what does she make? She makes $110,000 a year. Okay. And how quickly do you think you can find a new job? Is this something you can start looking for like this week? Yeah, I mean, a job and a good job are different things. Sure. I will, you know, I did get a decent severance package that can really carry, hold me over almost for a whole year. How much was that? So I have my full salary through the end of October of next year. Oh, good.

And that's not including the $100,000 you guys have saved. Correct. Okay, that's really good. That is nice. You're in a, I mean, I want to encourage you that you're in a really good position with the severance and with the cash sitting there and the fact that your wife also works. I want to caution you, though, because I don't want that to be a reason to not be motivated to really go out there and get a job that was just as good as the other, replace this income and possibly make more money. I mean,

what's to stop you from making more going into the next season with all of the experience that you have in that field? Right, right. Yeah, absolutely. And that's one of the goals for sure. if there's opportunities available. So if I were you, I would be looking tonight at your budget. Do you guys have a budget? We have a loose budget, definitely. Okay. You know, inclusive of the mortgage, one small car loan, and just other monthly bills.

So what I would do, we'll give you every dollar before you get off the phone tonight, but I want you and your wife to sit down tonight and really plug in all of the numbers because if you can, my goal would be to touch as little of your saved money as possible. do you guys have kids at home or what's who all is at home we we do we have three kids uh 14 11 and 6 years old okay so i would i would want the goal to be we're going to touch as little as of this 100 000 as possible so in order to figure out what that is you've got to set a budget for 110 and see okay monthly if we set our budget for whatever wife brings home and he'll be getting a severance and you'll be getting your severance too Oh, that's true.

So not much should change. Yeah, I would be paying your debt. How much you guys have left on your car? We have, it's a 2025, and we have a little less than $10,000 left on that. Okay, well, I would pay that off tonight. That's true, yep. What other debt do you guys have? That's a 4% interest rate.

I don't care. The only other, okay, the only other debt that we have is, our mortgage. Perfect. Okay. So the baby steps, Michael, is the seven steps that we walk people through. So technically, I think you guys are on baby step four because you guys will be debt free by tonight, correct? Because you're going to just pay off that car. And then you're, that'll be a $90,000 sitting in savings. And I would figure out your monthly expenses, what you guys, you know, what you have. And I would go ahead and get a six-month emergency fund just because you got three kids. The job thing is kind of in the air six months is plenty because you're still getting paid there i mean you're still

going to get a salary so i take that whatever that six months is for you um i'm making this up my so just say it's like i don't know 10 000 so say it's 60 000 you'll have 30 000 left and then with that 30 000 i mean honestly i don't think i would be motivated to feel like i have to keep anymore because of a job loss because you're you're you're getting paid the same so it's almost like you haven't lost a job technically right because you're still getting a paycheck, so you guys are still living your life. Is the severance at all tied to if you get new employment anywhere? Like, will that stop at all? Or do you get that plus if you get a new job? I would get that plus if I get a new job as long as it's not with the same company, obviously.

Okay. That's great. Which is awesome. Yeah. And then I would be funding 15% of your income into retirement, and I would count the severance as income, you know? I mean, I would still say. So I honestly would just, I would keep going and then I would put extra on the house. I mean, I would just go through the baby steps. I don't think I would be. be that alarmed. When I first heard you were being laid off, honestly in my head, I'm like, oh my gosh, if you have no savings, you're down to one income, then there's a lot of shifting that has to take place. That's usually people's situation, but you're getting a nice severance. You guys are going to be debt-free. You have a fully funded emergency fund. So not much really

has to change, Michael. I don't feel that urgency. Do you, Jay? No, I mean, the only thing I'm thinking is you've got to find another job that's going to replace your income and you've got to be on it. That's it, you know? Got it. So would you would you guys take that other $30,000 and put it into a brokerage account, like into an S&T 500 fund or something along those lines or should I just keep the cash?

You know, I, that's where my big decision is right now. So I almost would do option C, Michael, because if you're funding 15% of your income into retirement, the next step beyond any other investing is to pay off the house. So I almost would be tempted. How much do you guys have left on your mortgage?

$260,000. Okay. It's a 2.85 rate. Okay. Yes. Again, the interest rates don't really apply to what we talk. When we talk about math, it is so behavior change, finding peace. Dr. John Deloney, one of our other hosts, he always says we're solving for peace.

And we find when people are completely debt-free, that is one of the most peaceful places you can be financially versus high stress, high financial stress with trying to pay bills and keep up with everything. So you can do what you want with that $30,000, Michael, that's left. If you want to open up a brokerage account or something, yes, that is not going to, that's not going to hurt. But the next step technically would be to throw anything extra at the house. But because there is this, you know, again, kind of weird thing with the layoff, if you want to feel extra safe, you can. But I don't feel like you have to have extra padding. You know, when you have a six-month emergency fund, and you're still getting paid. Yeah, you're still getting paid.

Yeah, there's part of me that might wait until this, it's a lot. a storm. It's not the stormiest of storms because of the money. So get a job. Yeah. There's part of me that might wait until you land that next job. And then if you do, I mean, what a blessing because you'd be getting the severance plus to pay from your new job. Then you'd have something to do with this $30,000. Like, you could really do some major damage on your mortgage at that point as far as paying it off. Whether or not you wait until you secure the next job is really up to you and how you and your wife feel about it security-wise. Awesome. All right. Well, you know, appreciate, I appreciate the advice.

and hopefully good luck moving forward. Absolutely, Michael. Well, I'm sorry about the job loss, but I'm thankful you guys are in the position you are. You guys have done a great job saving. And, yeah, and again, that severance is so helpful. Rachel, let's just take a moment and talk about it because I could tell you were getting frustrated,

not frustrated, but like. The interest rate. The interest rate. And let's talk about that because people get so hung up on, I've got this debt, but the interest rate is good. So therefore, somewhere in their mind, they think they can just string it along because, is that 2.2%?

you know that it's not a big deal yeah it is a big deal debt is risk no matter how you slice it if you are tied to debt that means you have risk associated with your life and even if the interest rate is lower it's actually in many ways more dangerous because you're more likely to leave it around and keep it in your life for longer so just remember guys yes and that is debt and that is the hard thing because i think you know even the question with paying off the house you know people right you know they have $60,000 left in the mortgage and they have $70,000 in non-retirement investments. And they're like, wait, you want me to just pay off my house? But I'm making up to like 20% this last year.

You know, and my mortgage is the old interest rate of 3%. Right. I could be making a 17% spread. And so the calculations come into place. And again, we're not dumb. We get that. Totally get that. That makes sense mathematically.

But what is never calculated, again, is the emotions around money, which is what Chades, yeah, the emotions around money, the stress around money, the peace that you have around it. And so we can play the math game all day long, but that's even one reason we talk about you pay off the smallest debt first, not the highest interest rate. Like, it's not a math problem. Majority of personal finance is your behavior. It's not the head knowledge. It's not the Excel sheets. It's not trying to form the interest rate that's what's best for you and it's not that bad. Debt is debt. So to your point, the borrower is slaves to the lender when it says in Proverbs. So there's something freeing about being debt for you guys.

So, yeah, again, Michael, he has a great head start. I'm excited for him. I think a new change, good season. Yes, good for him. So it's not a crisis. This is just an inconvenience. Normal is broke and common sense is weird. So we're here to help you transform your life from the Ramsey Network.

the Fair Winds Credit Union Studio. This is The Ramsey Show. And I'm Rachel Cruz hosting today with Jade Warshall, and we're taking your calls at AAA 825-5-2-2-2-5. Up first we have Jeff in Minneapolis. Hi, Jeff. Welcome to the show. Hey, good afternoon.

Thanks for calling in. How can we help? Yeah, so my family and I were in the process of getting ready to purchase a home for ourselves. This will be the third home that we've all. We sold our previous house back in June when we were relocated for a job change. And I'm feeling that we're sitting pretty good financially with what we have invested and in retirement and trying to identify the right level of home that our budget can support while still letting ourselves be comfortable financially, but also feeling that going into our third home that we maybe don't need to settle on every single item at this point of our life as well.

Good. So what are you thinking about spending? well right now we're considering a property that would be around the 550 to 600 range okay and um i didn't ever think i would end up in a home of that size but with real estate being you know somewhat inflated right now that's kind of what we're looking and needing to be ended check all the boxes that we're looking for housewise and you feel good that if you put whatever down payment you're going to put it's not going to be any more than 25% of your take home when you include taxes insurance H-O-A, all that stuff?

Yeah, depending on what we put down for a down payment, we'd be tracking right about the 25% mark. What do you have saved in cash? So we've got to, we're sitting on 310 in cash right now. I know that includes a bunch of money from the sale of our home in the summer. About 50 of that is what I've considered to be our emergency fund. You know, the rest of that would go into the home purchase, so about 250. Okay.

Good for you, Jeff. Well done. Is there anything standing in the way? Do you have any other debt or? Well, we're sitting pretty good. Otherwise, we've got a small car loan, $5,000 on that. That's the only other debt that we have. We're free of credit card debts, free of education debt. Good. Yeah, none of that. We're a young family at home. What's the problem, Jeff? You know, young family at homes. We're trying to, you know, provide some flexibility to, you know, have life change if needed there, whether it's education or.

So what do you need from us? What made you call in? What's your biggest question? Well, as we've been looking at this home purchase is just, you know, what we think about is is that really the best way to deploy that money? Should that money go into a home purchase or should it be, you know, further invested or set aside for a child's education? Is it the right move to put that much money into a home right now? Well, you said yourself, you said you're sitting pretty with your investments. You said you're, you know, everything seems to be on track. So if you did, let's let's just play it out. If you did purchase this house, like you're saying, it would meet the criteria that we say is kind of a safe place to buy a house and still have enough margin to do the

things that you've mentioned, which is save up for kids, college, be able to put a little bit extra on the house. You'd still have that money in order to do that. Whereas if you didn't purchase this house, let's pretend you didn't purchase this house. Let's pretend that you, what would you do, take this money and invest it? Would you drop it in the stock market? drops them in the market beef up a 529 okay and then how long would you rent well we yeah we need to get into a long-term home as soon as we can just for everybody's comfort but you're saying maybe a smaller home something not yeah maybe it's a 400 400 thousand dollar home and our monthly you know our monthly payment is closer to 1,200 instead of 2400 would it suit your

needs if you did that or would you feel like you were sacrificing I would like we were sacrificing yeah and how old are the kids uh two and a half right now okay and how much do you guys make a year i'm at one i'm at 93 and my spouse is at my wife's at 57 okay i mean did you did you both how did you guys grow up with money jeff did you because you said we i wouldn't imagine ever buying a home yeah so my my wife my yeah my wife grew up from pretty you know pretty limited means, you know, larger, larger family, and they made it work. But, you know, she definitely comes from a, you know, a different background than I do. When I was growing up, we as a family did never have to worry about money. My parents always made smart decisions with it.

Who's more hesitant about the house purchase? You or her? Right. Affirable approach to life. I would say she's a little more hesitant than I am. Which makes total sense. And, you know, sometimes money's weird because you guys have been really successful, Jeff. I mean, guys make six figures. I'm going to say you have no debt because I think you're going to pay that car off tonight is what I want you to do with some of this money. You know, you're debt free. You have a fully funded emergency fund. You have a massive down payment. You have little kids. You've already started 529s for that. I mean, like, you guys in all terms are very successful. And I think sometimes if we come from a family where there was a little bit more scarcity,

you had to watch things, more caution around it. It's almost like her emotion. haven't caught up with the reality of what she's living. And I think that's really normal. I think a lot of people, and we get calls sometimes people know like, oh my gosh, we can spend this on vacation, but is that crazy? Like, they can't emotionally digest like where they really are at, you know, realistically. And so, um, so I could, I totally see where she's coming from and I get that. But also, our emotions can't be our driver of decisions always because they sometimes don't make sense. Like they're not logical always, you know. And when you look at the numbers. Yeah. You guys are. not out of control at all. That's a good time when the numbers do help you. Like looking at the numbers, I mean, the same thing happened to us the other night, Jeff. My husband had said there was a line item on our budget. He was like, man, I just think that's too expensive. And I had to look at him and say, in relative to what? Like, relative to what? Because sometimes you can have a certain number in your mind about a certain thing that, like you said, I didn't think we'd ever have a house that was five or six hundred thousand dollars. But that might have been relative to

the old situation. But relative to where you are. now, like Rachel said, it's totally within means. And sometimes running out those numbers and running out the actual percentage of your income is so helpful because it helps you, it helps your emotions align with where you are now and go, oh my gosh, this is, this is so true. And then just take some time and marinate in that, high five each other and be like, man, we really, we really did it. Good for us. We can afford things that we once thought were out of reach. And I think it's so important to mark those times, both mentally and emotionally, because they are wins. And it's so easy to go through life and not celebrate your wins.

That's so good. So good. That's good advice. Yeah, I appreciate that. Yeah. Do you all have a specific house that you, that you guys have looked at and you're thinking about putting a down payment on? Like, is there a specific one that she can, like, picture and see?

Or is it just, that's the price range and you guys are going to start looking? No, yeah. We've been in the market for a while. We've had several offers that have not gone through on different properties, which has kind of caused us to escalate what we're looking. to spend, you know, at one point we weren't going to go about $4.50. Now we're knocking on the door 550 for a specific property. So that's what gives us some apprehension as well. We've shifted away from our original conservative plan and we've always been conservative and all other financial

decisions. Totally. I hear you. I hear you. Yeah. That's when those guard rules really help, though, what we said before, the 25% rule. That's when that's kind of like your true north of. We may have started out one way, but this is truly the line in the sand. We know no matter what we choose, we're not crossing that. And I think for you guys, like you said, if you do the plan the way you said, you're not going to, you're not going to cross that line. And I think that's, that's good for you to remember. Our question of the day is brought to you by one. Refi. If you didn't take out private student loans hoping, you didn't take private student loans out

hoping to default, but life happens and Y Refi will not shame you. They'll help you explore a real plan to get you back on track. Head to whyrefi.com slash Ramsey to find out more. That's the letter Y, R-E-F-Y.com slash Ramsey, not available in all states. Okay, today's question comes from Jamie and Iowa. They say, I'm struggling to pay off debt, not because. I can't afford to, but because it's hard for me to let go of the cash that's in the bank. I have close to $80,000 in car loans and a $450,000 mortgage. I have liquid cash of $300,000 and a brokerage account with $100,000 in it. I know it makes no sense to keep the debt, but I have a hard time not seeing all of the

cash available. How do I overcome this mentally? Oh, man. So this is crazy because, yeah, if you were to clear out, the 300,000 of liquid cash, or at least, you know, take it down to three to six months and then take the $100,000 out of the brokerage. You could almost pay off everything, including the mortgage. Almost. You'd get pretty close. But for sure, you'd clear the $80,000 in car loans and get rid of most of the mortgage. I have a sense, Jamie, that this is some sort of like fear of the unknown,

I think. You know, whenever people cling on to savings, it's usually either one of two things. it's kind of like that scarcity mentality that we talked about earlier, which is maybe the way you came up, something caused you to be like, when I have money, I have to keep it. Whether you grew up super duper poor or you were in some sort of relationship where you couldn't get what you needed or you had a scary time where you lost a job and your family suffered and you had to go on food stamps, whatever that was, something affected you to the point that, yeah, you feel like you have to cling to money or maybe it was none of that. maybe you just feel like you're doing super duper well and you just love the feeling of looking over

in that account and seeing that money and just the idea of what it would feel like when it's gone, you don't know because you've never done it. And I think that that's so, Rachel, we talked about this earlier today. So much of what we teach is a big question mark to people because people are calling us, most people have been in debt their entire life. Most people have never felt what it feels like to have paid off mortgage. Most people have never felt what what it feels like to have, you know, in her case, $300,000 in savings. And so so much of this is a question mark that when we ask people to shift into the unknown, they're like clutching their pearls like, well, what's it going to feel like?

What's going to happen? What if, what if, what if, what if, and all these what ifs come. And I get it. It can be overwhelming. But in this case, you almost have to ask yourself, well, what if I don't do this? What's the repercussion on the other end? Let's talk about that. Because if you keep this $80,000 in car loans around, all you're going to end up doing is, you know, draining, milking yourself with interest.

That's ridiculous. Why do that? Same thing with the mortgage. I mean, an amortization schedule is there for a reason. It's explaining how much the interest is costing you year over year and how much is going to the principal. So you can see on paper that the longer you keep that debt around, the more you're paying an interest. So you kind of have to ask yourself at what cost? and what would it feel like to be free?

Yeah, and it is so interesting that people, we always talk about, change is so hard. And even if you're doing something that you know is kind of stupid, like what she's even saying. She's even saying, but it feels comfortable because I know. Even though what I'm doing is wrong, at least I know how it feels. And I can at least stay in there.

So there is a level of change in life that's hard. And that's if you're changing something relationally, if you're changing your, you know, physically or your health, like it causes something to be stretched within you. But if you're changing to something that is good and what we have found time and time again is that people that are debt-free, they are free. They are free. That's it. And if you want to get back into debt, you can always get back into debt. Like there's a whole industry waiting for you. Like, if you hate it, you can get right back in and, you know, take a personal loan and put money back. Whatever you want to figure out. You can put it back if you want to.

Yes, but there's something about owning your life. And when you pay things off and you build back up that savings, it's all yours. That car is yours. You know, that savings that you build back up is yours. And so it is. It's kind of a different approach. And you've even said, Jade, before how it is a, it's kind of a myth that you're safer with the cash. Yeah.

Because you have, you have risk. Like the cash, like if something were to happen and you have to drain your cash for some reason, you still have a payment. You still have payments. Yes. And the, let's just. If you want to take it completely mathematically, the feeling of, if you tell me, hey, I have 300,000 in a brokerage and 100,000, or no, I'm sorry, 300,000 in cash and 100,000 in a brokerage, you're thinking, you think you own $400,000.

But that is not true. If you own 450, if you owe 450 on a mortgage, you owe 50,000. Yes. Nothing is yours. That equation does not add up. And then there's the other 80,000 in car loans. So technically you are in the red. It's a negative net worth.

It's a negative net worth. So all of this is based on a lie that you're telling yourself, this money's mine, this money's mine. And it's really, really not. And so if you approach it from the math, the math is laughing at you. And if you approach it from the emotions, the emotions are going, well, there's more peace over here if you go ahead and pay this off. So it's kind of like what Dr. John Deloney says, you have to choose reality. Yeah. And what is the reality telling you?

And that's what I would tell you to do, Jamie, is. Take Rachel's advice, pay it off. And if you feel terrible, which no one's ever called in here and said, I paid off all my debt and I feel horrible. Help me get it back. But you could if you wanted to. You could if you want to. Yep. Hope that helps. All right. Let's go to Dallas and we have Chad on the line. Hi, Chad. Hey, how you doing? We're doing great. How can we help? So I've been listening for a while and pretty much everybody I hear you talk about the baby steps with is on a stretch. income. My question is my income fluctuates monthly and yearly. Is there a custom plan made for somebody in my situation or do we just try to make the baby steps work for me? Everybody? Well, there's a lot of irregular income earners that call in. I was one, Chad, if that makes you feel better. Yeah, I technically am. I mean, yeah, we get, I mean, I just hadn't heard one and all the

Okay, yes, yes. It's very common. There's a lot of people that are irregular, whether they're doing freelance work or commission-based positions where they make a lot one season or like photographers. They make a ton one season and then it kind of goes dead. So, you know, that is a very normal approach to money or people have that situation all the time. So no, there's not a special way to do the babysps. But if your job, is it seasonally very different, Chad? Okay. Tell me about that. What's the seasons? So Mother Nature controls my work, basically. I fix hail damaged cars. Okay. So if it storms, I have good storm seasons. I make a lot of money. If I have weak storm systems, then I... Perfect.

And look. So what I would do is... Like, I usually have about a four to five month slow period throughout the year that I save my money for that slow time. And so the thought of paying that money off on two. my debt. Gotcha. Yes.

Then work dies off and now I'm scrounging for money to pay my bills. So yeah. So the paying extra on your debt is that doesn't include your monthly expenses. So I would have that fund of what you've set aside for savings, which is so smart. I would consider that amount of money for your expenses, for your four walls, your food, your shelter, utilities, transportation. That's not just extra money that's just hanging out that has no purpose. That's to cover your basic living expenses during low season.

So we do say to have an account that we call your peaks and valleys. And if you know, okay, we spend X amount every single month that we need this much. And if we don't bring in any money, I have to pull this amount out of savings in order to cover our expenses. Like if you're down to a T like that and you know that that fund is there for that, no, I would not throw that extra at the debt. That's totally fine. The paying off debt is above anything or anything that you can cut. I would look at your lifestyle and say, hey, is there anything in our regular expenses that we have, regardless of, you know, seasonality of the weather that we can throw extra at the house? But no, that fund, I would consider your Peaks and Bally's Fund to be able to literally pay your bills.

So we don't tell people to get behind on their bills to pay off debt. Stay current, which is what that fund is for. But anything extra that you can squeeze out of the budget and or any more work you can do in those slow periods. That's the T. That's the T right there is doing work in the slow periods. go get another job during that time. And, man, that you could double up, which is great. Well, if you enjoy the show, one of the best ways that you can help us out is by spreading the word. So putting it on social, sharing it with your friends and family.

It's always helpful. So make sure to subscribe. And, yeah, give us a like, share the videos. And we always love to spread the word about the show because we want to help people get control of their money. Absolutely. All right. Next, let's go to Trey in Houston. Hi, Trey.

Welcome to the show. How are you doing? We're doing good. How can we help? So I'm about $4,000 in credit card debt right now. I don't have any other loans nor any other anything else. And basically me and my girlfriend have been talking about getting married. and I've been thinking about just engaging to her soon and stuff.

And she would be talking about homes and everything like that. And I've been talking to her about the show, but I just want to know how can I tell my girlfriend that I kind of lied about my financial situation. Oh, no, you lied. What happened? So basically, I only told her out like $2,000. Why did you lie, Trey? Why?

So at first, that's where I was at, and then I started just, it started ranking up over time when I did get my first, well, my third apartment, and then I just, that always is. So let me make this, let me understand. When you told her you had 2K, did you have 2K? And then you accumulated another two without telling her that you accumulated while you were accumulating the other two? Yes. Okay. Okay, that makes me feel a little bit more. Yeah, for sure. Yeah, so you didn't lie to her, like, up front, but you've not been honest with her since. When was that conversation that you told her 2K and now it's 5K? Was it a year ago or like two weeks ago? It was a couple weeks ago. So you accumulated the 2K in two weeks?

Yeah. Oh, okay. Doing what again? Did you say your third apartment? What was the 2K for? 2K was used mainly for basically like a lot of the stuff that I have, that currently, I got a lot of new stuff that I really haven't kind of told her about either.

Like what? Like what? I got a lot of new stuff. Name it. I got a new bed. Okay. I got new bed. I got some other like potpans, stuff like that. Okay, because you just moved. Okay. So you're buying stuff for the apartment. So I moved not to, so basically I moved not too long ago, but I've been at her apartment a lot of my time. Understood.

So a lot of the stuff has been at, I've been at her apartment. So just tell her. I'm like, I'm like, I spend the movie. What do you think will happen if you say, hey, just so you know. She's listening now, so she's probably hearing me. Is she there with you? Or is she, like, at work listening and you're going to come home to Fury? She's, like, listening on the, yes, I'm going to go.

All right. Well, hi, Trey's girlfriend. This is like, Mory. Why did you make it like this, Trey? Okay. So, what's your girlfriend's name? Can you say it since she's listening? Shela.

Shela. Shela, I can say it. All right, Shayla, now you know, and we're trying to tell him he needs to come home tonight and tell you what happened, but he's telling you now. So the key here is you need to start paying this off. What are you making? What do you earn, Trey? So I originally earned about 48, but now I make around 50 because I got a 4% pay increase. Good.

So I make around 50 a year. Good. At this point, I've been talking, me and her have been talking about this, like we've been talking, about your show. We would talk about the baby steps I sent it to her today and stuff. So we've been really talking and honing in the end and we've been talking about all the stuff about getting out of debt. She kind of told me where she's in bed on her end. How much does she have? I kind of just like around eight or nine thousand and student loans. Okay. Now can I ask you, Trey, if you've been listening to this show, what caused you to go? I mean, you have a fine income, 50,000. What caused you

to go into debt to buy pots and pans in a bed? Why didn't you just cash, flow that what was going through your mind so at first um the problem was was that i had to get the the stuff that's currently in my apartment the like couch and bed stuff is not mine it was my sister so i had to give that back to her got you so you felt like you're in a time crunch yes i was in a time crunch situation where like i have to you know kind of spend it just kind of do it either do it now i see so i just want to encourage you going forward i love that you and your and shahler are listening to show. I love that you guys are starting to hone in on this. I just want to encourage you and also just admonish you going forward. There's always going to be times where you feel like

there's a time crunch. There's going to be times where you feel like you have to move fast. Urgency is where the debt industry loves you when you're urgent. But you're on a car lot and you're like, I got to get a new car. Yes. I moved to, oh, go, go, go, go. They find you in crisis. That's right. 100%. A hundred percent. But if you can start now to exercise the muscle of just even taking a moment, taking a breather and going, okay, what can I do instead? Can I, can I sleep on a friend's couch for a week while I save up some money? Yes, could I go on Craigs. I don't even know if Craigslist or an air mattress, a hundred dollar air mattress. I slept on an air mattress for a long time. Yeah. So just always know, Trey, that there is always another option. Okay. So in a situation,

whether it's furniture or a car, there are options out there. So slowing down is a really big part of making wise financial decisions, not feeling you're backed into a corner. That and then, and I would want to get to, and again, it's only been two weeks, so it's not like you've lived with this for months and, like, lied to her, you know, I mean, like, but I would want to know from you what's caused you to not tell her. Is it because she'll get mad? Is it that you're embarrassed? Is it that you wish you had done better? And now you kind of have some guilt and shame around the choices that you've made. What was the main motivation? Do you know? I would say honestly for me the main thing was just like you know me and her have been talking about marriage um and like we've been talking about how much do we want to spend she's been talking about being getting eloped instead so we can save a lot of that money we don't just go in and just have this big wedding ceremony yeah um and she's not looking for that I think we've been it was a situation where it was like a little bit of embarrassment like dang like you know I didn't

really want to tell her that I just did this because she's going to be She's going to tell me, hey, why did you do that? You didn't need to do that. We could figure something out. Yeah. Even this, even this, Trey, is an example of just learning that communication pattern. You had a feeling about not telling her. You didn't tell her.

But then even still, you came on the show as a strange way of telling her. I would just want to encourage you in the future. Just, if this is a person you love, you trust, go to them and tell them the truth. Yeah, and starting off marriage with hiding the pots and pans, tray. want to do that we don't want to do that we don't want to get we don't want to get in that habit because genuinely i mean secrets start to they that erodes trust so fast and as honest as you can be tray with her about this and going forward i mean yeah jada we've been married we've been married over a decade both of us and to men our own husbands yeah yeah that's sorry not to each other to our own spouses uh that we

One thing, I think we both could say that, you know, there are things that are going to come up in life that you're embarrassed about and you're, you know, you don't like things. You know what you mean? Like, that is going to happen. And the moment you start hiding those things is where that trust erode. So the more vulnerable and honest you can be trained, this is a great first step. And let me just say to lighten the load a little bit that it's $2,000. Yeah, it's not. Some people, you know, sometimes it could be much worse.

It can be much worse, but that doesn't matter. Regardless of the amount, it's the principle behind it that I want you to get in a healthy pattern of you guys communicating and being on. And I want you to cut up the credit. Was it credit cards that you charged it on, you said? Yeah, it was all it was credit cards. Cut it up today. You guys have been talking and listening to the show.

You've been talking about the show, listen to the show, once you start doing the stuff that we talk about. So cut up the credit cards, you guys cash flow. She sounds amazing. I know she's listening, girl. We are for you. We are on her team and your team, Trey. But she sounds so level-headed and be wise about this.

You know, if you don't have the money, don't buy it and let that start to be a pattern in your life. And that includes the engagement ring. That includes the wedding and the honeymoon and all the things. But yeah, I think it's going to be awesome. Do you know when you're going to – well, no, I don't want to ask for that. Well, how long have you been together? Right now, I've been with her off and on. We were off and on for about a year now.

Okay. But I have been secured with her for about going on three months now. Secured with her. That's a good. I've been really, really, like. That's a phase I didn't know about it. Yeah, secured. Like, before we stopped talking for a little bit and then we got back together.

Okay, okay. I like it. I like it, Trey. Well, I'm excited for you all. Oh, man. Love it. And all the security coming forward. It's great.

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Hey, Jay. Hey, Rachel. How are you guys doing today? We're doing great. How can we help? So I am about to propose to my girlfriend of five years coming up in the next month or so. Oh, congratulations. And with us moving forward, obviously that comes wedding and pay for the wedding and looking at buying a house in the next couple of years.

my question is when you're saving up for a down payment and for a wedding, should you still invest your 15% of your income for like retirement or should you reduce that to a lower percent or kind of guidance on that? Well, so in the baby steps, technically the house would be 3B. So you'd save up baby step three first, so three to six months. Then you do 3B, which is save for a down payment and then four is the investing the 15%. Now, if you felt like you could do three B and four at the same time and make, you know, find progress on that down payment, I would say that's fine. That's up to you guys if you want to do that. Do you have any other debt or anything like that? So we're both out of debt. She's going to be graduating college here in December.

Great. Debt free. I'm currently debt free. We're keeping our finances. separate until marriage. Okay. So kind of just looking for guidance for what we should do. I currently have $20,000 in savings. Okay. Does she? My yearly salary, go ahead. My yearly salary, I'm going to a new job in two weeks.

My current salary will be $100,000, and her salary as a teacher will be $50,000 when she starts in January. What would you be looking to spend? I mean, in the Chicago area, it can be pretty spendy. What do you, what's it going to cost to get what you guys need? Probably somewhere as a first home, probably somewhere between 2 and 300,000. Oh, okay. Then, yeah. They're kind of further out in the West.

Yeah, and the wedding, right? How much are you guys wanting to spend on the wedding? We're just getting into those weeds. We haven't really decided on a budget yet. And don't call your wedding a weed. Is family helping pay for any of that, or is it all on you guys? Yeah, I believe both her parents and my dad, both are going to contribute to the wedding. So the first point of that would be really sitting down with them and finding out, honestly, what they plan to contribute, because that's going to, I mean, obviously, heavily impact what the overall spend of the wedding is, because,

you guys are then going to have to look at your budget and say whether they help us or not, here's what we can contribute. So having those numbers ahead of time and also understanding how it will be dispersed is very important to planning a wedding because if their thought was like, oh, we're just going to give you 10 grand as a wedding gift. That's very different because deposits and stuff have to be made. So really getting in the details on that, as awkward as it may seem, I think is so important and is so helpful on the beginning part of planning a wedding because those timelines and those you know those deposits they got to go on time yes yeah so to make sure you guys know okay here's what we're being helped with that amount and is that amount of money enough for

what we're wanting yeah as a wedding and if not how much more do we need to add to that and is that realistic or do we need to pull back some of our expectations so that and then on top of that yes saving for um saving for a uh house so if yeah if i were you guys you know i'm okay with people pausing maybe step four and not investing for maybe three-ish years. That's not really a hard and fast rule. But it's a good one, though. Anything beyond that, I would probably want to get in and start investing because that compound interest is so great.

But if y'all need to pause for a few years just to build up a large amount for a down payment, that I would be okay with that. But I probably wouldn't go any longer than three years, not investing. And then the three to six or off of expenses. it's really based off of you could think about it a couple of ways so i like to think about like job situation i like to think of uh relationship status and health so for instance if you were a single person i'd probably automatically go to six months simply because if i lose my income that's it right but if i'm married and there's another person who if i lose my income but if they have theirs

there's a little bit more security there so that's kind of how i uh consider like the relational side of it, then I'm thinking about health if one of you is in, you know, poorer health and there's an opportunity for hospital stays or being out of work. That's another thing that could impact wanting to have six months versus three months. So those are the kind of things that I look at with you guys. I mean, is there anything? Well, and I think I would say, too, from, are you asking, should you save three months of income or three months of expenses? Or were you asking time frame based off of how much you should save is that based off of saving up to three months of your income or two months of your expense? So we don't really do by income. It's more of expenses. So when

you look at keeping, yes, you know, the rent paid food on the table. So that's what Winston I did. We kind of looked at our monthly. And we say, did you go bare bones. We did it, beer bones at first and then later on we up it. Yes. Yes. So yeah. So you guys could just start with, okay, what keeps food lights on the rent paid and get that not all the extra exciting stuff no going out to eat like if you got the bare bones

how much is that and then you can multiply that by three four or five six and that can give you kind of that number for that emergency fund but what Jade's saying too I think is important that you guys are going to be

two people with two incomes no kids so you really could go on that three months especially since you are going to be saving up for a down payment like getting to that because you can always come back later Yes, and up it. That's right. That's right. Is that helpful, Andrew?

Yeah, that's perfect. That's one question, both questions. So, but I answered, definitely. I didn't know. Perfect. So great. Well, congratulations again. Yeah, that's going to be fun. All right, quickly, let's go to Jamie in San Diego. Hi, Jamie. Welcome to the show. Hi, thank you so much. Yes. How can we help today? Okay, my question is we, my husband and I, seven years ago, we're gifted financial peace university as a wedding gift. We were able to get completely out of debt, save six months of expenses in our emergency fund.

We currently invest 15% of our household income. And we have about $215,000 in savings. Okay. We live in a really expensive area. We cannot afford to pay a mortgage yet. We're in San Diego, so it's just really expensive. But my question is, we just had our second kid. supposed to go back to work in December, the thought of going back to work and paying so much

in child care for someone else to raise our kids, it's just really hard. So is it just a completely stupid move for me to not go back to work and us pull $1 to $2,000 of savings each month so that I can stay home with our kids because we have such a big question of savings? Yes, you'll have $2.50. You'll have $2.50 liquid, right? $2.15. Yeah, $2.15. Okay. You know, I would be okay with it for like, I don't know, if it really is $1,000 a month, and you need a little, so $2,000 a month. No, well, my husband changed careers about six months ago,

and he is on a track where he is going to be getting promotions, and so hopefully this would only be a year or two of having to pull from savings, and he has a lot of growth opportunity, but it's not yet. So I would say, I would say I would be okay with it. I think you guys have worked hard. You put money aside to be able to make some of these moves, but I would have a threshold because what can happen is you're like well we're in san Diego you know the promotions haven't really come it's not really what's happening you know

if stuff doesn't happen according to plan you can start justifying your position that 215 is going to be gone in an instant so you need a threshold to say we're not going past 100,000 savings so either I have to go back to work if the promotions aren't coming but have that threshold but yes I am okay with it for a time for sure but don't sit there and just drain that 215 without another plan. So have a threshold of what you will not pass. That can be whatever number it is for you guys. But yeah, you've worked hard to make choices, and this is a choice you want, and you can afford it. Welcome back to The Ramsey Show in the Fairwinds Credit Union Studio. I'm Rachel Cruz,

hosting today with Jade Warshall, and we're answering your questions. Up next, we have Nancy in Dallas, Texas. Hi, Nancy. Welcome to the show. Hi, thanks for having me. Yes, absolutely. How can we help today? So my husband lost his job about a week ago. Oh my gosh. I'm sorry. He was our sole income earner as I'm a high-risk pregnancy right now with our third kiddo. And I just want some guidance on how we navigate the next few months until he's able to find work. Oh my gosh. Okay. Are you high risk because of your age or are you high risk because of other factors? Because of other factors.

And thank God there's a chance that the issue will resolve itself by the time the baby comes to term. Yeah. How far longer? Until that, I'm on bed rest. Okay. I am 24 weeks right now. Okay.

Okay. So financially, where are you guys? How much debts you guys have? So we actually moved houses earlier this summer to a house in the country and we've been trying to sell our other house Oh gosh, you have two mortgage payments? No, thank God.

The house we're in right now, we have no debt on. Oh, great. Yeah, but we have debt on the old house. Okay. And then we have two car loans. Okay, how much are your car loans? My husband owes $5,000 on his truck, and then we owe $24,000 on my minivan. Okay.

And how much is the payment on the 5K, the truck? $770 a month. Okay, and how much is your van payment? $507. Okay, and how much is the mortgage payment on the house that you're not living in? $1,470. Okay. Perfect.

Okay, and what was he bringing? home per month? Like, what was hitting your account? He got a lot of overtime, so it was consistently between seven and eight, but his base pay was $40 an hour, 36 hours a week. Okay. And what was, what was he doing? What kind of work? He worked maintenance, facility maintenance. Okay, okay. Do you have any money saved? I mean, you were able to buy a second house kind of outright. Where that money come from? My husband worked really hard. We both did for a while. And then we came into some family inheritance money. And so it just kind of like sped up this process for this dream we had of moving out of the city and slowing down our lives. So between savings and inheritance,

we were able to get out here. And then we thought selling our previous home, it would pay off the cars, pay off the mortgage. What will it bring when you sell it eventually? It's listed for $260 right now, and I owe $160 on it. So it should pay off all of our debt. Yeah. Okay. And so you don't have anything left over saved from?

We ended up using all of our savings pretty much built the house. We still have our $1,000 emergency fund, though. $1,000. Okay. Tell me this, Nancy. How hard will it be for him to be able to replace that income? It just feels like maintenance, I don't know, again, I don't want to be ignorant, but I feel like that's a very wide spectrum of being able to probably plug in somewhere

pretty quickly, right? Would you, does he feel like there's options? He's been applying a lot. I don't know that we'll find anything that's comparable to the last company. Sure. But I think we can find something in the high 20s, low 30s. Sure. Okay.

So what I would do, because you all, you guys have $2,700 a month going out to debt. And I would figure out, maybe you already have a really tight budget to figure out, you don't have a mortgage payment on the house you're currently living in. But I would figure out food, utilities, gas for the cars,

like the things that you guys have to have and figure out, okay, here is the minimum that we can scrape by. And I don't know what that is going to be for you guys. I don't know if it's $4,000, $5,000. I have no idea. But you guys need to figure that out with the debt included. And if I were you, which I'm so urgent, so I can't even imagine how you're feeling that you're on bed rest and like this is happening. Did he get any severance at all?

No, no severance. Okay. What's the movement on the house? Is there anything? Like, I would be on my realtor like, we got to close. Like, we got to get an offer and close in 30 days. We've had the house listed since June. And it was originally as listed at 290.

And we've dropped it. When did you do the drop? Five months. Oh, it's been gradual. Okay. It's been gradual. Yeah, well, average. It down, I think the last drop we did like a week and a half.

Yeah, average is two months right now sitting. So you guys are over that a little bit. It might be a price thing. Yeah, so I am with Jade, you know, what you guys can do to be urgent on that, but even urgent on the on the income side. Like, if I were home, you know, I wouldn't, I wouldn't care if it's comparable for right now. some things are going to turn right this um after you know you have the baby the house sells like some things are going to start to like alleviate some stress right as life continues on um i mean

it'll be in the next you know six seven months but until then in these next bit i mean i would think until like summer like that would be in my head i got to go do anything yeah anything to be able to stay current on this stuff um and and my hope is too nancy that he that he does apply and that what he was doing obviously was bringing and market value of something that was fantastic and that he can find something. I think there's always a natural assumption in our human spirit that if we lose something that the next thing's never going to be as good. And so we're probably going to have to always downgrade, especially if there's like a layoff situation. But that's not always the case. Yeah. I think both of you've got to sit down tonight and decide that come hell

high water like debt you're not going to go crazy into debt because of this like even if he's picking up uber tomorrow like any money coming in is going to be better than no money coming in because with a thousand dollars yeah you guys are you guys are up against the wall which is for the listening audience why we always say you got to have three to six months of expenses before buying a house you've just got to have it even if you're counting on another house to spend money's not yours until it's in your hand like that's this is a cost of word for the wise for everybody else listening and um yeah for you guys nancy i mean we're pulling for you whatever he can get immediately i we had a call the other the other day where a guy lost his job and i'm

i'm going to give you the same homework that i gave him which is to make a list tonight you guys sit down make a list of everybody you know that's in that field or know somebody that's in that field and call him like make contact don't just text them call him and say hey i'm in the market do you know anything have you heard anything and really start making those connections person to person as much as you can he should be going to coffee with people and because that's the way you're going to get a job just putting in resumes you know on the internet doesn't work anymore so make that list tonight and you guys hit the pavement on that yeah absolutely nancy oh i'm so sorry i could only imagine how stressful but i think the stress will lower when money starts coming in and any way that's possible

for him in this season. That's what we're looking at. And I know I'm sure he feels it too. But yeah. So, and again, that budget figuring out how much on the minimal side that you guys can spend on food utilities, all of that, cutting subscriptions, not going out to eat. You guys are bare bones. It's kind of that crisis mode right now.

And that's okay. And you're going to get through it. You're going to get through it. And he's going to find another job. The house is going to sell. Things are going to happen. But for now, we are going to buckle down. Everyone needs insurance, but it can be hard trying to find a pro who's not just looking to make a buck,

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All right, let's go to Mary in Portland, Oregon. Hi, Mary. Welcome to the show. Hi, hello. Hello, hello. How can we help today? Oh, thank you so much for just hearing this story out and giving your thoughts. So basically my husband and I were debt-free except for our mortgage, and he is a hardcore

do-it-yourself or works really hard. He's a diamond in the rough. We bought 10 acres 23 years ago when we got married with a single-wide mobile home on it with the intention to build. And, you know, life happens. And there was five of us in 850 square feet. So him being him, built an addition onto the mobile home that has, failed. We have extreme mold and it needs to be torn down. He wants to rebuild it. And I think that

we should either build or bring in a double-wide mobile home. We've even looked at moving, but with a brand-baby on the way and my mom just recently in assisted living, I don't think that's just an option. So we're kind of curious, what would you do when you're in this situation when you really don't owe much on your mortgage? And you're looking at how do you're another mortgage. Yeah, just question, why can't you move? You said a baby and your mother, is it because you don't want to leave the area or the property? Because you could move somewhere else. I'm not saying that's the option. I'm just making sure that I've, that I heard you correctly. Basically, it's family that's here, and we live in an area that's extremely expensive,

and we could never purchase what we have right now and replace it. My husband has built a shop on the property that he has worked out of. And so that would mean leaving that and leaving our extra income, we just couldn't replace it. We'd have to move really far away. Sure. Okay. And you guys have, is it 25 acres? We have 10 acres. 10 acres. Okay. Perfect. And how much is the mobile home worth right now? You mean like the current mortgage? Yeah. We owe 95,000. Okay. And how much do guys make a year? A year. He's at 80,000 a year. That doesn't include any of the extras. Okay. On average, what does he make extra? That one, I couldn't say. It kind of comes and goes. And so we don't really rely on it. It could be a couple thousand every month or so. So can I ask a question about

the addition? So you've got, you had the initial mobile home. Then you added an addition. The addition is the only place that has mold, right? As far as I know, we haven't dug too far into it other than the addition. So if you were to, how many in your family? Is it just? There's five of us. Five of us. So if you were to remove the addition, could everybody temporarily be in the initial part of the house? Or like, I don't know how large this is. It's 850 square feet. Yeah, I mean, it would be tight, but yeah, we could do that. How much? How much? would it cost? I'd love to know the numbers of what it would cost to remove the addition and then what it costs to add another edition? Um, my husband's business is all themselves. He won't let anyone

else do it. So, still, he may not have an option. I mean, like, you know what I mean? Like, that's, that's where people pin themselves into bad situations is because, well, he won't do it or, you know, and I'm talking more to him than you, Mary, that, you know, you guys are in a situation that it's like, I don't know. It may have to be an option. We, we, we, you know what I mean like just taking it off completely because of his pride and he doesn't want to he just wants to do everything himself which obviously didn't work so we need all the options in the world right do you feel that way but he like won't even he won't even entertain the idea no he will he'll entertain any of the idea he's phenomenal we just want to

make a financial decision that's correct you know because we don't owe much on our property he is more of the type that once it's paid off he can breathe and he has room but yet we have no home to live in. Well, yeah, you can't live in mold. So again, again with my other question is, regardless who does the work, what's it cost to tear it off and what's it cost to put a new one on? I mean, I guess tearing it down, he would do. So it wouldn't cost anything to tear it down other than taking things to the dump. Okay. So free? Free. Okay. And then rebuilding it, I think it cost us maybe five to seven thousand to build it. Okay. So then that would, that's the equation we're solving for. How quickly? Now, if you have to, that's why I asked, can everybody

stay in the main side because you've got to get out of the mold. So it's like getting that done and then doing the math of how quickly can you save $5,000 to $6,000 with the margin that you have? Because there's no other debt, you should have a decent amount of margin laying around. I mean, maybe not a decent amount. You're a family of $5,000 on $80,000. Do you work, Mary? I homeschool my kids.

Yeah, so yes, I do. Yeah, no, fair, fair. I shouldn't, yes. I didn't really phrase it that way. But I say, I'm still going to ask the same question because you work full time, your husband works full time. Both of you are going to have to do something on the side to bring an income in order to save up this $5,000 to $7,000 as quickly as possible because you guys are going to feel each other's

presence in that single part of that mobile home. His side business, I mean, you said kind of like, well, it's like around $1,000, maybe $2,000 a month, but we don't really count on it. I would be counting. I mean, I would make it a goal to say we need to save at least $2,000 for, the next three months. That's $6,000. So then we can start the addition. And that'll be a couple of months to do that. And so, you know, life looks different come, you know, May June. If you guys actually buckle down and say, hey, no, no, no, we are going to work extra to make this actually

happen. Yeah. The one thing that concerns me is the fact that once you get into a mobile home and you take parts out of it and you add new parts in, it's not legal. And also insurance doesn't cover you if your house burns down. So that means. So what you're saying is your husband can't do the work. You have to hire a professional. I don't think legally you can build an addition onto a mobile home. But he did. And you were living with that and you wouldn't have said it. Don't get me wrong. I'm not saying that you need to do something legal. But where was that logic the first time, I guess is what I'm asking. My husband does things on his own terms. Got you. So Mary, help me with this. When you called in with the question, Rachel's first thing was you need to move somewhere else. And

were like, that's impossible. So now we're, now we try to go into your world and say, okay, well, then let's just rebuild. And you're like, well, here's the problem. So what do you want to do? Um, I mean, I'm open to anything. That's why I was calling. Well, you're not open to anything because you're not open to moving and you have, well, I'm, listen, I'm on your side. But I'm just saying what you said back to you, you're not moving is too expensive and you're concerned with the legality of the addition. So there, you have some qualms. So you're going to have to choose, is there an option that we didn't think of? Is, are you thinking, hey, scrap the mobile home and let's build our own home?

You tell us what you're thinking of doing so we can help you get there. That's probably what I would look at anyways, Mary, to make it a goal to build something. It would obviously be more expensive, and it would be adding on a mortgage. So I want you guys to do that. But having something that, you know, because mobile homes, I mean, depending on the markets, yes, sometimes they do go down. And so having something from a financial standpoint that's really steady. study for your family long term, I think, is a great goal. Is there a building plot on that land, on that 10 acres?

I mean, I'm sure there is. Yeah, right where we're sitting. Okay. So, yeah, so maybe it's you guys moving somewhere part-time. I don't know, I mean, I don't know, Mary. I'm just trying to think of things. That's what I was kind of leading towards. Okay.

But is that financially a good choice when you're almost paid off on your mortgage? Do you want to add another 30-year mortgage? Well, it's not that what you could consider, and this is, just I'm throwing something out there because I like Rachel's idea of getting in something permanent that can go up in value but the truth is you don't have the money to do that today and you're living in a situation that's not healthy because of the mold. What if you kept the land? What if you rented somewhere for a while to save up to be able to build on the land? People do it every day and renting for a while is not going backwards. No. And it would be,

you know, he could still keep his shop, you know, there on the land. But yeah, You guys are going to have to get creative for a long-term plan to get this to work. So it's not, yeah, it's definitely not one plus one just equals two. And this is like the easy route. There's going to have to be some give and take from you guys from location standpoint maybe for a little while while you guys save some extra work that you're doing. But again, the long-term thinking here for housing is the key, not just in the next six months. Up next, we have Michael in Seattle, Washington. Hi, Michael.

Welcome to the show. Hi, thanks for Dick Michael. Absolutely. How can we help today? My question is, we are expecting our firstborn in March next year. Oh, congratulations. Thank you. And my question is, am I able to?

to afford or is it wise for me to stay home with the baby? Well, let's look at it from, are we obviously a financial perspective? So does your wife work? Yes. What does she do and what does she earn? She's an HR manager and she earns 170. Okay. And what do you do today and what are you earning today? I'm an engineer and I make 135. Okay. Do you guys have debt? we have some debt on a rental property and that's it oh and our mortgage okay so if you were so you have some debt on the rental and then your mortgage what's your mortgage worth uh the the note it has 450 left and the house is worth 585 okay what about the rental i'm just curious uh rentals 225 worth 225 left on the note is one

50. Okay. Okay. Okay. Um, you know, if you, if you were to have crunched the numbers and said, okay, like, we can do, do you have three to six months of expenses? We do. We have about 30k in, uh, yeah, and set aside. I mean, yeah, if you crunch the numbers and you're like, okay, we'd be going down substantially, but we can live off 170 and we can continue to do, you know, baby. step four. And, you know, I don't know how I feel about this rental. Maybe that's not the question for today. But if you can do it budget-wise, there's really not a problem. Yeah. Have you all done a mock budget at 170 just to see, like, what she brings home every month? Do you guys comfortably live there? Can live on that? We have not done a mock budget, but we can probably live off 170. And I know probably is not a good term. Yeah, you got to do it in real numbers. Right. Usually the home is the problem.

Yes, that was my primary question is, can we afford the house? Is this advisable? Should we pay down the mortgage more? How much does her paycheck a month? How much is her paycheck a month? Right now, it's like maybe $6,000, but that's got some investing taking out of it and other things. That's fine, because you are in baby step four, so that would have to, the investment, would have to stay taken out of it.

But how much is your mortgage? Mortgage is 4,600. Ooh, 4,600? Impossible. Yeah, that's almost, I mean, that's, well, yeah, then you guys, you can't live off 1,500, can you? A month? Because.

If she brings home 6,000. No, you can't, I'm going to answer it for you. And your mortgage, right, Michael? But for real, like, that's, that's not right, right? You can't live off that. Yeah, she must bring home more than that. I'm sorry, I'm getting my numbers mixed up. Okay.

Well, that's, it's important to do that budget. And I also want you to consider. Well, yeah, if she makes $170,000, she's not bringing home $6,000. Yeah, no. It's more after, even after, uh, after tax and everything. Yeah, it's more like $10,000. Okay. That would make more sense.

And then you saw. said that she is, do you know what percentage is going towards investing? Yeah, 30%. Okay, so that could come back down. So you'd have some extra money there. So that's looking better. But also you have to consider this rental. And I would probably say if you do this, that you might have to sell the rental

because if for some reason you don't have renters and you're on the hook for that mortgage for a time, that's going to put you up a creek. Do you agree? Yeah. Yeah, absolutely. Yeah. And that'll give you a $70,000 cushion, too, with the equity, which is just nice during this time. Yeah, because are you really making anything off the rental, or are you just kind of breaking even?

Breaking even. Yeah, I'd sell it immediately and keep that cushion. I'm just curious, Michael, what caused you to be the one to stay home? And not her. I know she's making, I mean, yeah, she makes 35 more than you do, but I don't know, was that a, was it a career decision? She loves her job, and after the baby, she definitely wants to continue on with her career. Yeah. I like my job, but don't love it, if that makes sense.

Okay. Yeah. And, yeah, I'm just wondering if I can stay on with the kid because I feel like I would be a better dad than I am an employee. I love it. That's great. Okay, perfect. Well, if we sell the rental, what should we throw that equity to? Technically, at this stage, it'd go towards your mortgage.

That's where you're at in the baby steps. I mean, once you guys are doing 15% and you're putting a little extra for the kids college, right? 529 once the baby is born, then any extra money would go towards the mortgage. And you really wouldn't do any investing on top of the 15% until after the mortgage is paid. So, yeah, I mean, right now if you're, let's see, you're at 30,000 saved. Yeah, I mean, that's good. if you wanted to, is that a full six months, like full budget, six months? Yeah, that's, that's just our cash aside, not our other assets.

So if you said she's bringing home 10 grand, that feels like three months of savings, I'd probably beef that up to six if you wanted like a robust three to six months since only one person's working. And then, yeah, the rest of it, you could put it towards a house. That's what I'd do. Okay, so pay down the mortgage fast we can. and tighten up the budget and it would be okay. Yeah, I think that's great.

Yeah. I mean, the numbers aren't crazy. I mean, the mortgage, $4,600 going to $10,000 is like a little bit like a, but I mean, if that's what you guys are choosing, then, right? I mean, it's close to 45%. Let's give you some clarity because you said you still have to dig in on the numbers. if you get the numbers and it's over 30% you got problems. Like 30 is like...

And that includes back her match, like her retirement and all of that, right? That's added back into the salary. So don't take that out. Add the retirement back in. That gives you a little bit buffer. Health insurance, you can buffer back in. So some of this is like,

this is just after tax. It's not after health insurance and retirement. So add those numbers back into her salary. And if the mortgage is more than 30% of what, she's bringing home, that gives us pause. Yeah, 25% is the rule, but you can make it work on 30, but just know it's going to be tighter. That's why we said that, but that's what you're getting to. If you're getting upwards, Michael, of 35, 40%, you have to just say no, at least for a season until you can, I don't know, maybe get this house paid off, or maybe it's you working part time and

closing that gap on the mortgage and, you know, working it out like that. Yeah, for sure. No, it's a good question. I think that's always a hard dynamic, Jay, that we get a lot of people wanting to go down to one income, usually because of a family. And they've set their lifestyle as a two-income lifestyle. And yeah, you take one away. The mortgage suddenly is a larger part of your percentage and all this stuff. That's one reason the rule of thumb of living below your means in general is a great idea. That's right. Because when you overextend yourself, even beyond two salaries, right? You're going into debt and all of this. then pulling back is that much harder. And if the bank, if you go to buy a house, you guys, the bank is going to offer you a lot more money than what you need to take. And so you really do want to be more conservative on these numbers so that it gives you options and choices. And if you know you want to be starting a family soon and one of you wants to stay

home and you're looking to buy a house, remember this, right? Like don't build your life around two incomes if you know that it's probably not going to be two incomes for the next couple of years. but all that's really it's really hard though and then to do a mock budget because we get this question a lot if they can be a stay-at-home parent yeah run the numbers for real and live it out if you have the opportunity and the time to try it yeah live one month with the budget that would be and see how it all feels because sometimes people go down to one-income thing it's going to bring peace and it actually brings more stress and for a season you know work to get out of debt and put yourself in a better financial situation and then come back home and there's more margin and more peace and more enjoyment So, yeah, a lot of different ways to look at it in a values conversation, too, of what you want for your family, for sure. But also, we got to be adults and make the math work.

Our scripture today comes from Isaiah 5410, though the mountains be shaken and the hills be removed yet my unfailing love for you will not be shaken nor my covenant of peace be removed says the lord who has compassion on you uh the singer pink we got pink we got the book of isaiah the singer pink love it pink said uh you can't move mountains by whispering at them okay pink all right and guess that's true I guess we just be a little more aggressive towards those mountains maybe I don't know also a mustard seed, I thought, but... Is it conflicting with the Bible?

Pink, you're... I don't know. We don't know where we get our clothes. We just, we take them. Listen. We take them. She's a fabulous singer. Yeah. Give her that. And a great she dances. She does all the like aerial trips. Yes. We'll give her that. Not quotes. All right. Let's go to Tracy in

California. Hi, Tracy. Welcome to the show. Hi. Thank you so much for taking my call. You are welcome. How can we help today? I left teaching. I was an elementary school teacher several years ago, and now it's time for me to go ahead and apply for my pension. And I have a couple of options that are quite different, and I wondered if you could help me decide. All right. What are your options? Well, I can retire now at 60 on my application, and I will go forward with a monthly pension of about $1,700 a month, or I could backdate to age 55, and that would lower my monthly to $1,135, but I would get about $73,000 to cash out, about $50,000 after taxes.

$50,000 in addition to the $1,100 that you'll get monthly? Yeah, that'll still go forward. Okay. What other retirements do you have saved? And so my husband and I are debt-free, thanks to the Ramsey plan. Good for you guys. Yeah. And so I have about 360 in retirement investments. Okay. And his accounts have about $500,000 in retirement investments.

Good for you guys. And then he will get his pension. and that will be about $7,800 a month plus Social Security and Medicare. So, or, well, medical and then Medicare Sunday. But what's that amount to? Yeah. So 78 total for him. Yeah.

That was including his Social Security and everything? No, Social Security will be on top of that. And how much will that be? And we're guessing not much. We're guessing probably 3,000 at the most. 3,000? Maybe closer to it. And will you have some social security as well? No, I will not. I didn't qualify for that.

Okay, so that's 10,800. What's your, what's your monthly budget? What's it take to operate your lifestyle? Yeah. Well, we live in a very expensive part of California. So right now with pets, et cetera, we're. probably at about nine okay so if you had it his is 10,800 um it takes nine to operate the budget and that's not you ever touching a nest egg and then if you had the 1700 would that be more than enough um well because I'm almost wondering this 50,000 could be helpful for you as a nest egg and if you can get by on the thousand then

I probably would take the lower payment but getting the lump sum of the 50 because then you get to invest it, Tracy, right? With the pension, you don't have a lot of control over where they're investing it. So if you get this 50,000, you guys could put that in a great index fund or something. You know what I mean? And you may not even have to touch a lot of this retirement just because of his pension and yours. But if you need to, that's why it's all there. But if you got that 50,000, you guys are in the upwards of, you know, a little over $900,000 on your own, which is incredible. And, with your house and everything. I mean, yeah, you guys are babysubs millionaires, Tracy. You're exactly what we talk about. I mean, you're a teacher. I mean, it's just, it's phenomenal. So I almost would want more control over the pension and the amount. Sorry, I would, I want control. So I would want it as soon as possible so that I can turn around and invest in something that I know, you know, I'm pretty guaranteed of what I'm putting the money into where the pension, you don't really have a lot of control over that. So I would, I would for the latter, getting 1,100 with the lump sum of what it'll be, 75, but 50 after taxes.

Yeah. The extra 700 is incidental for you, I think. Okay. Yeah. I guess I didn't consider investing because we already had money put away. So, you know, I don't, I didn't know that that's what we should do with it. and I was afraid that if it comes to us, it'll be gone, you know, whereas the larger monthly pension would continue for my life. Well, I think it's the opposite. I think that $700, if you add it to your monthly budget, it's going to get pittled away on dog food and other things.

But the $50,000, I mean, if you turn around in the moment you get it, if you invest it and put it with your other nest egg, that's going to go to work for you in far greater ways than that $700. because you weren't going to invest that $700 a month. You were going to likely spend it on lifestyle, right? And you said that your lifestyle ticks right now on $9,000. So with your husband's pension, his Social Security, plus your $1,000, you're already at $11,800 a month, which is basically more than what you have now.

And that's not touching your retirement. And you guys have other savings, right? Do you have other savings? That's just like an emergency fund on the side? Yes. Perfect. Yeah, Tracy, you guys are doing, yeah, you're doing great. Either way, you're going to be fine. So just hear me say that. If it just, if that just keeps you up tonight, then choose the first one. You know, either way, totally fine. But if it were Jade and myself, this is, this is what I would choose. All right, let's go to Olivia in Wisconsin. Hi, Olivia. Welcome to the show. Hi, how are you? We're doing great. How can we help? I was kind of wondering if I should be paying off my student loans. while I'm still in college

or if I should keep taking them out and wait until afterwards. What would you be paying them off with? Do you have income? Just other side income money. Both my fiance and I work

part-time. Okay. So if it were me, I would be saving to cash flow as much as you can for the remaining college and not take out any more loans and see, okay, what do we have to cash flow to not go deeper in debt and then once you graduate you'll have six months until those payments start hitting and then you guys can tackle that debt or you tackle it's your fiance but i know you

probably will be getting married how much do you have in student loan debt um i have about 10 000 and he has 20 okay he has 20 you have 10 and how much uh how much do you have left in school how much time um we both have like two and a half years left still okay and what's it What's it cost per semester? Per semester, for me, it's about five with like financial aid and whatnot. And for him, it averages about 10. Okay. Yeah, so I'd be focused, like Rachel said, on how can I cash flow this every single

semester so I'm not going further into debt? And cash flowing my portion. You guys don't need to be paying on each other's tuition until you are married. So that is a call we get, Olivia, where they're like, I have $30,000, but I helped my fiancé get through school and we never ended up marrying. No, no, no. So I would be separating these. So whatever work you're doing goes towards your tuition, whatever work he's doing goes to his.

And then once you guys get married, do you all have a date set? Yeah, it'll be May of next year. Beautiful. So after May, then you guys can combine everything. Are you guys making enough to live off of being full-time students? Yeah, we make, yeah, we get, we take our extra loans for that too as well to make about $3,000 a month. Wait a minute. That's not made money if you're taking loans for it. We want to stop that. Do not take loans to be living off of. You guys need to be cash flowing your lives.

And if that means pausing school for a little bit, then we may need to do that. But we're not, we don't need to go deeper in debt for lifestyle. So you either need to find and be working more or just, yep, pump the breaks on the tuition because you guys may not be able to afford. it right now. Thanks for the call, Olivia. Well, Jade, great show. So always fun. Thanks to all the guys in the booth. And remember, there's ultimately only one way to financial peace. And that's to walk daily with the Prince of Peace. Christ Jesus.