The Ramsey Show - App - Our Home Builder Wants To Raise the Price of Our Contracted New Home (Hour 1)

Episode Date: April 28, 2021

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Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. Thank you for joining us, America, open phones at 888-825-5225. That's 888-825-5225. David is going to start off this hour calling us from Jerusalem, no less, Israel. Hey, David, how are you? I'm fine, Dave.

Thank God. How are you? I know the answer, but how are you? Better than I deserve, sir. How can I help? Awesome. Well, first of all, thank you so much for taking the call. We love what you do. Thank you. I know the answer, but how are you? Better than I deserve, sir. How can I help? Awesome. Well, first of all, thank you so much for taking the call. We love what you do. Thank you. Our 10-year-old daughter has around $46,000 in a family trust. The trust allows distributions to pay for college, but it triggers a capital gains tax whenever that distribution is

taken. My dad, her grandfather, has suggested we take a distribution of about $21,000 now, really plus the tax burden. So let's call it, say, $26,000 or $27,000. Net of tax would be $21,000 to buy a prepaid college fund from the state of Florida where we're moving back to. No. And, okay, no. Even though that guarantees four years, no matter how high the costs and tuition go in the future, and no matter what happens in the stock market. Yeah. What you're guaranteeing is the rate of return on your money is the inflation rate of tuition.

Tuition inflation rate for the last 58 years is 7.2 percent average okay i guess everyone's a little worried about what it's been for like for the last eight to ten everyone's a lot of things but the actual math is that it doesn't go up at all doesn't go up at all doesn't go up at all and then they spike it one year and so everybody goes into drama queen mode uh where you're much better off i, to invest in good growth stock mutual funds if you have that option, and in a 529 where it's growing tax-free, and you're going to outpace the growth rate of inflation for tuition. Okay, so that's the second part of the question.

Would you take a distribution now and put that net into a 529 now to grow tax-free? Yes. Or just leave it, yeah, and not leave where it is to grow tax-deferred? Right, because tax-deferred obviously is all going to be taxed later. Tax-free is going to be tax-free later. And I'm also making a quick assumption here that the funds in that trust fund probably aren't invested in good growth stock mutual funds oh no i think they are okay we've talked about it okay good well so either okay so here's what we're going to do then let's assume the exact same rates of return in your equation right yeah so you. So you leave it alone, and it grows at, we'll call it 11%, okay?

It grows at 10%, 11%, okay? And 100% of what you take out is taxed. Or you take it out now, and you pay a 15% capital gains tax. I'm sorry to interrupt, but I should tell you, most of the principal was family gifts, so it would only be taxed on the capital gains tax. I'm sorry to interrupt, but I should tell you, most of the principal was family gifts, so it would only be taxed on the capital gains above the gift amount. Okay. So we're not reducing the account as whole by 15%.

We're reducing it by maybe 5% or whatever. Right, right. Okay. Then it's going to grow from there 100% tax-free. So would we rather have, we'll make up a number, 95% of this account that grows from now until college 100% tax-free at 10 or 11, or would we rather it grow tax-deferred and all of it be taxed, or virtually all of it be taxed, all the growth be taxed when you get there?

So the difference is tax on all of that growth versus a five percent cut today and um that's there's a you're gonna you're gonna come out with the tax free much better off got it okay thanks so much you see how i did that i i do and and the longer the longer it stays in the family trust the more the greater percentage of it will end up being capital gains because it's going to keep compounding exactly and the greater percentage of it will end up being capital gains because it's going to keep compounding. Exactly. And the greater percentage of it will be taxable. The longer we get taxed, the longer we go.

Yeah, it'll be taxable. And if we were putting it into an account that became taxed at ordinary income later versus leaving it there in capital gains, we wouldn't do that. We'd leave it in capital gains because that's a lower tax rate. Right. But that's not the case. In the case of the 529, you're putting uh how much is in the account well for her about 46 000 right now okay all right yeah you're gonna have to look at we'll see with a smart investor pro or somebody

to help you select a 529 that will allow that much you may have to move it in two tranches uh some one year some this year some next, in order to get it all moved. But either way, the principle still stands, the concept still stands, that you're going to be better off with a tax-free growth than a capital gains growth, assuming exact same rates of return. So, interesting call, man. Thank you. Appreciate you checking in. Hope things are going well there in Israel.

I'm ready for you guys to open back up over there so we can come visit again open phones at 888-825-5225 jonathan is with us in olympia washington hi jonathan how are you i'm doing good dave about yourself better than i deserve what's up uh hey i just uh had a question for you we, my wife and I are on baby step two and things have been going pretty good. Over the last year, we paid off about $30,000 in debt. Way to go. Thank you. Yeah. The only problem I'm having, I have the, the Ramsey plus every dollar app going on and

everything. But the problem we have is the miscellaneous category, things that we don't buy every month. I'm trying to keep it within the parameters that I've set is seems like it's almost impossible. I know it's not, but it's just, it's hard to plan for what might come up. Like for instance, you know, we just got a little $20, $30 thing, you know, death by a thousand cuts each day. Like we just got a puppy and we get a baby gate for it, you know, and to keep it from going all over the house with $20, $30. Or we chip off a package to a family member and pay the postage for that,

you know, another $15, $20. What's the best way to really keep that in check and where we're not, you know, arguing over it all the time for these things that we don't really know what's going to come up? How much are you putting in there? I have it set at $100 a month. Okay. And so the discussion is, how long you've been doing this

how many months um since last may so almost a year okay so out of a year how many times has this been a problem every month pretty much yeah okay is it the sense that one of you thinks the other one is overspending or have you just simply underfunded this account? That's kind of what I'm wondering, if maybe I've underfunded it. I mean, I try to be really strict, and I have adjusted the budget every month. Like you say, it can change. Do you have good records on, if we want to get real nerdy, on where the money went that came out of that account?

Probably not that great. That's fine. I mean, I'm looking here now. So there's two options. There's two options. One is lighten it up a little bit, just make it $150,000, and let's move on, okay? Okay. And there's nothing wrong with that because you're just recognizing that you have a miscellaneous need that is higher than you've been budgeting for,

and we need to have reality in the budget versus mythology. The second thing you could do is you could find a trend that a certain, you need a new category that splices off. And you need to put $50 in that new category that keeps showing up in this miscellaneous over and over. And I don't know what that new category is. It could be puppy. I don't know what it is. But, and, you know And it could be that that category is what's draining you dry. People all over the country are discovering a faith-based and budget-friendly way of meeting health care costs through Christian Health Care Ministries. Christian Health Care Ministries, or CHM,

is a nonprofit organization that helps members carry one another's burdens with health care expenses, and they have successfully shared each other's medical bills for nearly 40 years. See if CHM is right for you by visiting chministries.org. CHM is a proud sponsor of Dave Ramsey Live Events. Thank you for joining us, America. Our famous $10 sale is back. It's here.

You can now learn how to make faster and real progress with your money when you check out our famous $10 sale. You can save up to 60% on over 40 of our best-selling books and budgeting tools, like Debt-Free Degree from Anthony O'Neill, The Proximity Principle from Ken Coleman. Plus, these, of course, make great gifts. You can shop the $10 sale at the online store at RamseySolutions.com. You can get all of my books there at $10, all of Rachel's. I think the new one even is down to $10 now. So check it all out. And, uh man there's some deals there that's a that's a and while you're there you

can register to win our uh ramsey cash giveaway we're giving away five hundred dollars every week and a grand prize of five thousand dollars cash of course no purchase necessary got to be 18 to win you can enter daily so text cash to 33 789 if you want to register for that cash 233 789 and of course ramsey solutions.com on the store that's where the 10 special is shane is in mobile alabama hi shane how are you uh better than i deserve dave how about yourself just the same sir how can i help um well my mother is set to receive a settlement uh from an accident probably in the sum of maybe the hundred thousand dollar range and of course because i've been through your financial peace university and stuff like that

i'm the son that she calls for financial advice good um you know when i told her i said you know i said let's i said let's call call Dave and see what Dave has to say, because my mother is 60, my father is 65. He's set to retire this year. And I told her, I said, I just don't want y'all to blow this money. Let's call, see what they say. Maybe they have an ELP local, you know, somewhere around Huntsville that can talk with y'all and, you know, try to steer y'all in the right direction.

Okay. All right. So what's the rest of their financial situation look like? I don't want to lie to you. So I know they have a house. I'm not sure. I want to say maybe it has five or six years left on it that they could possibly pay off, vehicles are paid for, and things of that nature.

So they've been pretty responsible. Yes, sir. Yeah, these people aren't acting like they're in Congress or something. No, sir. No, sir. She just, you know, she's, I will say this, they kind of helped my little brother out who lives up there near them, and that's what I told her. I said, just, you know, I said, do what you do.

I kind of don't want to, don't call and ask me for something and then get mad when I tell you, you know, what you need to hear, not what you want to hear. Oh, good for you. Good for you. That's a good word. Well, I think the biggest thing is people like that that are fairly responsible don't do stupid things on purpose. They do them on accident because they did not have a purpose. And so the wisest thing I can tell you is they do need to decide before the money gets here exactly where it's going to go. We're going to put $10,000 on this.

We're going to put $8,000 on that. We're going to give the little brother $2,000. We're going to invest it. We're going to pay off the house. on this. We're going to put $8,000 on that. We're going to give the little brother $2,000. We're going to invest it. We're going to pay off the house. I don't know. You know, whatever. But every one of those dollars, and it doesn't all have to be one place is my point, but every one of those dollars needs an assignment before the money gets here.

Because if it doesn't get an assignment, that's when the money has a tendency to wander off. Exactly. And even with somebody that's responsible because they feel like they hit the lottery. Now, is she okay from the accident? Is everybody okay medically? Yes, sir. Yes, sir. She actually got back surgery probably five years ago,

which had nothing to do with the accident. She retired, and like I said, my dad, he just had shoulder surgery two weeks ago. So you think they've got a little bit of a mortgage, and that's it? Yes, sir. If I'm not mistaken, that's it. No loans or anything like that. Well, I would make sure they had an emergency fund. I'd make sure they had an emergency fund.

I would pay off the house. I would give some of it. I would enjoy some of it house um i would give some of it i would enjoy some of it and i would invest some of it okay that's that's kind of kind of where i was at and kind of along my lines but i just needed your professional opinion on that yeah the idea that you don't give any of it is a bad idea i don't care how much the idea that you don't enjoy any of it and you're like hyper responsible, we're going to invest every penny and we're going to have no fun at all. No, I think you need to have some of the money. And it doesn't have to be a lot. It's just a matter of what feels good.

A little bit of we're just going to have some fun with this money. We're going to give some of this money. We're going to invest some of this money. We're going to pay off the house and make sure we have an emergency fund in place. Those kinds of categories is where I would dump this money. And all of that, of course, is following right down the baby steps. But if you can get them to commit on a simple yellow pad exactly where the 100 is going before it gets there, that's a touchdown. You just scored.

Because they'll follow through on what they write down on that one little yellow pad, one page. They'll do it. And they'll feel weird if they don't once they think it through. But if you just chunk it in the checking account, you'll look up and go, well, little brother got half of it, you know, or some stupid thing like that. And that's not going to be okay. Navin, I guess, is with us in Cleveland, Ohio. Is it Navin?

It's Navin. Navin. I got it wrong. Sorry about that. Okay, Navin, how can I help? Good question for you. So I work for a family-owned or family-run construction company here in Ohio, and currently I'm driving my personal pickup truck for both personal use,

company use, whatever. And long story short, my dad would want me to upgrade to quite a bit of a newer truck. And the company would be paying for, they would give an allowance of $25,000 for this truck. And anything on top of that, I would have to pay out of pocket. And then that truck would be, I guess I could use it for company use and personal use. And I guess I'm just not sure, yeah, what to think about this type of deal. And pretty much the truck would be in the company's name then, just looking to get some advice on it. Okay.

If the company's going to, if the truck's going to be in the company's name, the company needs to pay for the truck. Okay. If the truck's going to be in the company's name, the company needs to pay for the truck. Okay. Listen, pretend like this wasn't your parents, okay? Let's say you were working for me, and I said, okay, I want you to put in $10,000. I'm going to put in $25,000, and I'm going to own the truck. I would never do it. Yeah. Well, that's dumb.

So, no, company needs to own the truck, and the company needs to to own the truck. I would never do it. Yeah, well, that's dumb. So, no, company needs to own the truck, and the company needs to pay for the truck. So if Papa wants you to have a truck, then he needs to pony up the cash. What if, I guess I'm a legal partner in the company. Does that change anything if in the next, say, five years we'd be looking to take over quite a bit of the company what does that change anything if in the next say five years we'd be looking to take over quite a bit of the company if you have controlling if you own 51 or more than you're

making all the decisions and you are the company okay but right now you're not okay until you are that no i mean i own my company so what what i title my cars to whether i title them to my personal name one of my companies or one of my other my cars to whether i title them to my personal name one of my companies or one of my other companies is irrelevant since i own all three right it's irrelevant it's just a titling issue at that point but this is this is more of a what is best for uh you you know that's that's what we're asking here and no you don't buy a 35 000 truck and put it in the company name and you put up 10 grand in it no so if they want what's what we're asking here. And, no, you don't buy a $35,000 truck and put it in the company name, and you put up $10,000 in it. No.

So what's your truck worth that you're driving? That's about $5,000 right now. Okay. Well, move up to a $25,000 truck is pretty substantial, so that's enough of a truck. Yeah, for sure. And that's the other question. They're writing a check for $25,000 cash, right? Yeah, for sure. And that's the other question where... They're writing a check for $25,000 cash, right?

Yeah, for sure. Okay, they're not signing you up for payments on $25,000. Either way, if the company buys it, I buy it. Either way, it's a cash deal. It's a debt-free company as well. We do everything with cash. Okay, good, good. And here's the thing, okay?

I grew up in the real estate business, the construction business. I've been around it my whole life. And the idea that you're taking a nice new pickup onto a construction site is pretty absurd. If you've been on construction sites very long, you know the guys with the junkiest pickups are the ones that have the most money and the ones that look like a dadgum Silverado commercial or broke people with payments. Yep. And so don't... This would be a... It's a cash transaction. I got that. But so don't... This would be a...

It's a cash transaction. I got that, but I don't know what we're trying to prove here. $5,000 pickup will do everything on a construction site that a $25,000 pickup will do.

Who are we trying to impress? The subs? Give me a break. But if he wants to write a check and you guys think you want to do it, there's nothing wrong with it as long as he's paying for it

and it goes into the company name and he puts up the $25,000. Nothing wrong with that. But don't put, no, we don't need $26,000. And we certainly don't need $35,000 with your money being on top. Thank you for joining us, America. We're here to talk to you about your life and your money. Open phones at 888-825-5225. Brian is with us in Kansas City.

Hey, Brian, welcome to The Ramsey Show. Hi, Dave, thank you. So my question today is, basically, me and my wife decided that this was going to be the best year to build a house, and we're kind of finding out that's not really true. So we went under contract two months ago, gave our contractor the earnest money and the deposit. Haven't really heard a lot back from our contractor. They haven't broken ground yet. And then last week, we got an email that said, due to material prices increasing, they have to raise the price of us, of the materials,

and they have to raise the price of the house. So basically, I kind of pushed back on that, went back and forth with them for a little bit. And they said in the contract that there's paragraph 30, they have the right to raise the price based on maturity. So I talked to my mortgage guy, and he had his legal team look at it. And it looks like the only out that we have is if the loan gets denied, they legally have to give us our money back. What do you think about the morality of that? Does that seem like a moral choice that's good? Does it not?

Just your thoughts. That you walk away from the deal? Yes, sir. Okay. Not the morality of them raising prices? No, not the morality. The morality of me walking away from a contract that I agreed to. Yeah.

It was dumb. So how much did they raise the prices? 3.5%. So it was about ten thousand dollars and the other thing in the email they said is that they can no longer lock down prices with their vendors so whenever they order say lumber for frame of the house whatever the price of lumber is that day is what we'll have to pay so it looks like the price of the house is going to increase also more than what they've already told you?

Yes, sir. Okay. And what's the price range of the home? What is the price overall? The price was $314,000, and it's about $325,000 now. Okay. And what's your household income? About $90,000. Okay. And what's your household income? About $90,000.

Okay. Well, to start with, let's just say that what they're telling you is the truth. Lumber is going up rapidly. That's not a lie. And they have the contractual ability to raise the price. And my guess is the market's hot enough that if you don't buy the house, they can sell it to somebody else. I would agree.

Yeah. So I don't think they're going to be harmed in this situation. But basically, you'd have to get a turndown letter turning you down for the loan from your mortgage broker? Yeah, he said that's no problem. Okay. All right. I don't have an issue with the morality. I mean, the deal has changed.

Nobody in this deal anticipated that the deal was going to change uh and based on the change you don't want to be in the deal you know i don't want to be in a house but i feel like i kind of got you know the the bad end of the stick i don't i don't think you're getting the bad end of the stick i think i think if you're if you were building a cost-plus house, which is how I build mine, meaning I pay the cost and I pay the builder a flat fee to manage the project, you would be absorbing all of the increases. I'm building a commercial building that we break ground on, a conference center here, and our steel prices doubled and we hadn't even broke ground yet.

And that's all on me because the contractor just manages the project in a commercial project they don't they don't it's not a it's not a turn key deal they pay they pay them a contractor fee and we pay the materials and so um and steel doubled and uh so i've just got to go well do i really want to do to do this? Well, yeah, I'm going to do it. But I told them, go and buy the steel and put it out there in the field somewhere so it doesn't double again in the next 18 months while we're screwing around with this thing. But that's the reality. Steel, plywood, lumber packages, glue, wire.

There's a shortage of everything because all the factories shut down during COVID and the shortage has driven the price up uh and then add to that that the real estate market got white hot coming out of covid in most areas so i don't i don't think you're being hoodooed i don't think they're messing you over if i did i just pull a plug on heartbeat just on the principle but uh the other thing is this um you know at 10 years from today, is this all you're still going to be thinking about if you're living in this house? I feel like probably, yeah. Yeah, it's going to eat at you. Yeah, you need to get out of the deal then because it's just going to eat at you.

Okay. But I don't think this guy's a crook. Okay. I didn't get that guy's a crook. Okay. Yeah. I didn't get that vibe from him either. It's just they're asking us to take their word like, hey, you know, we're telling you we don't know what the prices are going to be, but please take our word that we're going to try not to raise the prices. Yeah, he's not trying to.

That didn't work last time. Yeah, but I mean, the difference is unmet expectations. You guys entered into this. Nobody saw this lumber shortage coming. And so, I mean, he's probably built houses 10 years and never faced this one time. And all of a sudden, the stinking lumber package went up a ton. And that's a major component in a residential home is the lumber package. It's your biggest item on your line items and so you know he's he he's like crap now i gotta go deal now i gotta go deal

with a customer who's gonna be mad like i did something wrong and i didn't do anything wrong i just got screwed myself by the situation so um i i don't think the guy's a bad guy um he is passing the cost on to you, which he contractually, nobody ever thought you'd ever activate that little known clause of the contract, but he's able to do that. But I think the biggest thing is you're just not ever going to be happy here. So you're better off to be done. And, you know, you can sit down with him and tell him that

and say you can either let me go or I'll get a letter on the turndown and then I'll be let go. So he probably doesn't want to build a house for you if you're unhappy the whole time anyway, especially given that he probably has a line around the block of people wanting to buy the house without you. So and they'll pay whatever the prices are. In most cases, I don't know, but I would suspect Kansas City is like a lot of these other places right now. Zach's in Chicago. Hey, Zach, what's up? Hey, Dave, thank you so much for taking my call. Sure, how can I help?

I am 33 years old. I'm single, and I make about $107 in salary a year. I'm looking to buy my first home. I am pre-approved for a 15-year mortgage at 2.49, with 20% down. The only debt I have is student loans. I have $24,000 in student loan debt. My realtor told me about a program that forgives student loan debt up to 15% of the purchase price of the house, which would be all of my student loan debt for $24,000. But in order to qualify for the program, I would have to take a 30-year mortgage at 3.69%,

which is about, even if I pay it off in 15 years, it's going to cost me about $13,000 over the 2.49 for 15 years. What is the payoff provision? Is there an early payoff penalty? There is no prepay penalty. Why not refinance it six months later? I have to keep it for three years. Oh, that's a prepayment penalty.

Okay, so your interest on it for three years is all you're eating, not for 30. Yep, not for 30. I've never heard of this program. This is the wildest butt thing I've ever heard of. I've never heard of a student loan forgiveness thing but if the numbers if the deal works exactly like you're outlining it yeah for three years you pay the higher interest you got rid of all your student loan and then you refinance at the end of three years i'm doing that sure weird Thanks for joining us, America. This is The Ramsey Show.

I'm your host, Dave Ramsey. Open phones at 888-825-5225. Mike is in Atlanta. Hey, Mike, welcome to The Ramsey Show. What's up? Hey, Dave. Thanks for taking my call. Just wanted to ask a question about downsizing my home.

Okay. So here's the deal my wife and i were able to purchase a home in 2012 on a short sale for 135 um and the home value has currently gone up the tax successor has is at like 235 um zillow is putting it at like $235,000. Zillow is putting it at like $280,000. Yeah. We are wondering about, now, as a side to this, I also have student loan debt. I just put $22,000 down, paid $22,000 on my student loans.

I currently only have $28,000 left on my student loans. So the only debts we have is our mortgage and my student loans. We've paid off both cars, paid off her student loans. Good for you. Everything is paid off. Way to go, man.

You're doing great. I appreciate it. My wife and I have been working at it really hard. How long have you been working on this? Well, we purchased the home. How long have you been working on this debt? On the debt? About two years now.

Way to go. And what's your household income? On the debt, about 10 years now. Way to go. And what's your household income? Household income, I bring in 65. She brings in, I work as a project specialist. I bring in 65 a year, and my wife brings in 52 a year as a teacher. Good. Okay. All right. And so you only got 20-something thousand

left and you'll be done. Almost there, huh? Exactly. Well, I mean, also including the mortgage, we have the remaining balance on our mortgage is $114,000. Yeah, but that's baby step six. So, but I mean, you're just about finished with baby step two. You're just plowing right through it. You're doing good. good how can i help what's your question what i'm thinking about doing is repeating the same thing we did before um we're looking at uh short sale and uh pre-foreclosure homes in the area and we're wondering if it's if we could should purchase a pre-foreclosure or short-sale home and then sell ours and use the balance to pay off the remainder of our debts.

Well, you only have $20,000 in debt. You've got hundreds of thousands in equity. True. Okay. What I'm saying is if we were able to purchase the short sale home and sell ours, we'd be able to pay off the mortgage of the new home and – or potentially be able to pay off the mortgage of the new home and my remaining student loans in one suit and be completely debt-free. Well, you'd sell your home is how you get rid of that mortgage, but the other home wouldn't be debt-free, would it?

Well, it depends on what we're able to do. That's the concern. What we're looking for is something very similar to what we're currently at, our current situation. Yeah, but things aren't like they were in 2012. There's not a lot of short sales. Listen, for a short sale to go through, the market has to say nobody's buying this house okay for enough to

pay off the mortgage and very few homes are upside down right now because of the increases in value so are you is your particular market uh dormant um i don't think so we were i went online and i was able to find one property that meet that met what we were looking for. It was somewhere around 135, three-bedroom, one-and-a-half bath on a basement, which is enough room for me, my wife, and our two boys. Is there something you dislike about the house you're in? No. It's not that I dislike my home. We just wanted to figure out the fastest way to run out our debt. And I thought that if we could buy a 135, sell ours around the 250, 280 mark,

and use the profits from our home to pay off the original mortgage and the 135 for the new home, or it's close to all of the 135 for the new home. Wouldn't you be moving down substantially in-house even if you got a deal we will be moving down into like right now my home is uh four bedroom two and a half bath on a full basement um two car garage uh so yes i would be moving down um because the 135 000 purchase on a short sale or foreclosure might be, what, $175,000 house, right, if you got a deal? Right. Right. Yeah. So you're talking about moving down in order to get debt-free house and everything.

That's exactly what I'm talking about, Dwight. Okay. Well, don't sell yours until you've got a deal tied up, for sure. But if you can find a deal that both you and your wife like, and it causes you to be 100% debt-free, and you all like that more than you do the house that you're in, meaning you like the idea of being debt-free in a lesser house, I don't have any problem with that. That's not a bad strategy. And then, you know, you're saved like crazy, and you're probably going to move up in-house substantially with no house payment, no student loan payments.

You're making $110,000. You ought to be able to pile up some cash, right, and move up in-house in the next three to five years if you were able to pull this off. I think that this is going to be harder than it sounds in your head because I think the market is so hot that you're not going to find as many foreclosures and short sales as you once did. Okay. Because a house, you know, when everything's selling, people sell a house before it goes to foreclosure. When everything's selling, there's no need to short sell it because they sell it.

Right. I figured it wouldn't be as easy as what I'm thinking in my head, which is why I wanted to purchase the home first, you know to get under contract for the short sale. If you want to run out the exercise, just have the discipline to not do the deal unless it's the real deal. Okay. Because I think this is going to be very tough in this current market. I buy real estate all the time, and I'm not buying real estate right now. I mean, well, that's not true.

I am, but it's unusual situations, and it's not because it's not like it was in 2008 where I bought stuff at a nickel and 10 and 15 cents on the dollar. It was a wonderful year for buying real estate. But, you know, that's not quite the opposite right now in general, especially when you're talking about residential stuff. Hey, Mike, way to go, man. You're doing good. Have the discipline to not get so caught up in the idea that you do a bad deal

just to make the idea happen because then the idea doesn't work anymore. Joe is in New York City. Hi, Joe. Welcome is in New York City. Hi, Joe. Welcome to the Ramsey Show. Hey, Dave. How are you? Better than I deserve, man.

What's up? So, quick question for you. I'm 22 years old. I'm getting married in the fall. Have no debt. My fiance and I both have no debt. Great. We have about $20,000 in savings. Most of that is going to be used to pay for the wedding and grad school expenses.

Phenomenal. So my question is, how much should we be into gazelle modes at this point? How much can I go out golf golfing can she go shopping you know how how committed to replenishing that savings should we be and should i pick up a second job even though it might take away a little time from the marriage to help replenish that savings uh to the extent that you do not have a fully funded emergency fund and you don't have grad school funded, you need to run like your gazelle on fire. But if both of those are funded, then we can relax a little bit. Okay.

But an unfunded emergency fund is inviting problems into your life. That's like sending out an engraved invitation to murphy do you know who murphy is the guy that says if it can go wrong it will right makes sense yeah and so but when you've got an emergency fund you can like chase black cats and stuff you know you don't have to worry about it so be be in gazelle mode until that emergency fund is fully funded and grad school and you got grad school, because otherwise grad school is going to turn into debt, right? Right. Yes, sir.

Yeah. Grad school and the wedding, we'll be able to pay for those for both of us in cash. Phenomenal. What are you guys studying? I'm studying theology. She's education. Awesome. Very cool. Good for you.

Well, good. Then, yeah, as long as you're cash flowing grad school and you got your emergency fund in place, then we relax a little bit. But baby steps one through three, that's where gazelles are. And after that, we let our foot off the gas and we just go into marathon mode instead of sprint mode. And you just go, you slow down a little bit and start running so you can finish an entire marathon. And that's four through seven at that point. And that's what we're talking about here.

So if you're avoiding debt and you have the emergency fund in place, you're paying cash for the wedding, touchdown, baby. Good job. This is The Ramsey Show. Hey, guys, this is James, senior producer for The Ramsey Show. Did you know over 18 million people listen to The Ramsey Show every week?

And a lot of those people listen on one of our 600 plus radio stations across the country. To find a station near you, head to theramseyshow.com.