The Ramsey Show - App - Ramsey Rant: Apple Is Becoming a Digital Payday Lender! (Hour 1)

Episode Date: March 31, 2023

George Kamel & Jade Warshaw answer your questions and discuss: Balancing part-time work, a mountain of debt, and pursuing a dream career "Apple Pay Later" and why Apple doesn't give a rip about your financial health. from the blog: Buy Now, Pay Later? Why Installment Payment Plans Are Hurting Your Wallet, "We have buyer's remorse after buying our house" "How much should we spend on a car?" Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Want a plan for your money? Take our FREE 3 minute assessment: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

🎵 Live from the headquarters of Ramsey Solutions, broadcasting from the Pods Moving and Storage Studio, it's The Ramsey Show, where we help people build wealth, do work they love, and create amazing relationships. I'm Ramsey personality, George Campbell joined this hour by the amazing Jade Warshaw. And we're taking your calls at 888-825-5225. You jump in. If you've got a question about money, you heard something on social media, you're wondering if it's true. Your broke brother in law gave you some real estate advice. Let us be the third party to talk you off the ledge and avoid some terrible decisions. And if you've made some terrible decisions and you're self-aware, call into the show. We want to help you climb out of

that hole. We are specialists in that because we've done a lot of dumb things ourselves, and we're happy to help. 888-825-5225. Well, it's been a fun week on the show. I kicked it off with my friend Ken Coleman, and we talked about the value of the U.S. dollar and why you should be more worried about your own personal behavior than a total economic collapse. And then, Jade, you and Dr. John Maloney had some spicy calls. Oh, my gosh. A woman called in where her mother-in-law had stolen $300,000 out of the inherited IRA. I would have fallen out of my chair. I did. Almost.

Goodness gracious. And you guys talked about the perfect storm of stupid money habits brewing in America right now. Yeah, that's right. All the credit cards and HELOCs and taking out all this debt, how it's affecting Americans at a very real, very catastrophic level. And then you wrapped it up with some crazy stuff that we've all done to get out of debt. You specifically did some extra crazy stuff. Oh, yeah. I told John the story about searching for a keyboard that ended up being worth only $20 and I also

told him, George, the story of the infamous nude cruise. I just heard the story today and it just tickled me. So be sure to go back listen to this week's podcast episodes on your favorite podcasting platform, YouTube or a Ramsey Network app and check those out. Yes, I can see the

studio audience, they really want to know more about that nude cruise. A lot of intrigue. You got to watch the episode. That's what we call a tease in the biz. All right, let's kick it off with Josh in New York City. Josh, how are you doing this hour? Very good. How are you?

We're doing well. How can we help? I'm calling because I have $8,500 in credit card debt. Self-employed, but the past couple months, the money's been pretty much, you know, unemployed levels, it's been really bad. So I know I need to get a full or part-time job to pay off this debt,

but I've been working in film for a year, and I want to figure out, you know, how to keep my career going and combine these two and pay off the debt quick. Okay, cool. So you're working in film, and the work has been pretty dry lately. It's been kidness. What would you say, on average, is your monthly income from this? Well, I do this and Uber also, but really it's maybe like $400. $400 a month from film? Yeah.

How long has it been like that? Uber on the side. Maybe like two, three months. Okay, And before that, how much were you making? Probably in total, maybe like 800. So how have you been surviving? Because you live in New York City. So what have you been doing to cover the bills? I live with my family. Okay. So you have low expenses, but you've been going into credit card debt to cover what? The debt was actually

because I had a six-month alcohol problem and I just racked up a bunch of debt like an idiot. Yeah. What are you doing to help out

with that alcohol problem? Are you seeing somebody? Are you in counseling? Awesome. That's great news. So let's talk about the money side. You've got $8,500 in credit card debt. You have low expenses because you live with family.

Do you have any other type of debt? Okay. What are you doing in film? What exact role? No, just this. I act, but also I do different jobs on set. Lighting, assisting, second directing. Yeah. industry completely outside of even uber yeah and so i would look start to look at what skills you have and even if there are no skills everyone can go get a retail job work in hospitality serving coffee shops you name it that's right george makes a good point josh just you know

when you're when you're in the arts sometimes the lure is well this is my job this is my craft and you you kind of uh don't want to put any time into anything else. But at the end of the day, you do have to make money, you got to eat, you got to make those ends meet so that you're not having to go into credit cards and things like that. But I kind of want to raise another issue here, because it sounds like this has been going on for far too long, just this kind of barely getting by, barely making it. And of course, you kind of had that bout with alcoholism. And I really want to challenge you to get to the bottom of what that is, because something is is eaten away at you to the point that you're not doing all that you could be to go after this.

And in my opinion, it seems like it's linked in some way so i want to really encourage you to keep getting to the bottom of what's causing you to kind of put forth minimal effort in this what's kind of causing you to revert to some some negative behaviors there because i don't think that us just telling you hey here's what to do with your money is necessarily going to be your your solution today although we're happy to do that. Am I touching on something? Yeah. I mean, one thing, the reason that probably a big reason about why my income with film is like this now is because during those six months when I was like that, I turned down a lot of work that I shouldn't have. So I kind of derailed my career for a bit. Do you have an agent that you're working with that helps you book these gigs?

I do it just myself at casting agencies and friends and anything on the internet. Okay. Now, I'm guessing you have a lot of friends in this industry. I have a couple, yeah. I would start conversations with them. You want to find something that's flexible to where if a gig came up you could go take that gig and do this work that you love that pays really well but in the meantime I'm getting a full time

retail job that has a more flexible schedule because we can't live off 400 bucks a month yeah and so we need a bigger shovel right now so that one day you can get out of your parents house is that the ultimate goal? You know, I planned on doing that this year, but I got terribly derailed last year, you know.

Life hits you. How old are you? 26. Okay. Well, the good news is you've got lots of time on your side, and I want you to dig deep and find that why. That's what's going to keep you going when you're like, well, I'm working 60 hours a week. I'm not doing the thing I want to do. Find that deep why. That's what's going to keep you going when you're like, why I'm working 60 hours a week. I'm not doing the thing I want to do. Find that deep why. If that's, I want to get out of debt so I have the freedom to do acting and pursue film, that's a great why. If it's because I don't

want to live with mom and dad anymore when I'm 34, that's also a great why. And we're going to give you a tool to help with that called Financial Peace University, as well as Every Dollar Premium. That's going to help with budgeting. It's going to help you get this new information. It's going to help motivate you to actually change your life and keep it that way. Yeah. And write those goals down. Write them down. Write them down on paper. Put it somewhere where you see it every day, whether it's those sticky notes on the mirror. Share it with somebody so that there's some accountability in place because that's really what's going to motivate you to get to the next level with this thing. Absolutely. Hang on the line. Austin's going to pick up. We will hook you up with Financial Peace University and EveryDollar. We're cheering you on, man. Addiction

is one of the most difficult things a person can go through. And the fact that you're on the path, you're working to get to a point in life where you're doing the work you love and getting paid to do it. I'm just so proud of you, man. Stay the course. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Campbell, joined this hour by Jade Warshaw, and we're taking your calls at 888-825-5225. All right, Jade, about a thousand people have sent this news over to me, and so I feel like we have to talk about it before the week is over. And it's about Apple. And you know, I'm a big Apple fanboy. I used to work at the Apple store.

I look like just every Apple employee you've ever seen. And I'm a big fan of Apple, but I'm not a fan of their latest program, Apple Pay Later. Oh, no! It's here, folks. And it's more dangerous than I could even explain, Jade. You know why? Because no one has to sign up for it. It's already built folks. And it's more dangerous than I could even explain, Jade. You know why? Because no one has to sign up for it.

It's already built into your iPhone. I hate this. I hate it already, and I don't even fully know what it is yet, but I kind of do. So, yeah, we decided to make this a surprise for Jade, because I'm a giant nerd, so I'm just looking at this stuff all day long. Run down the facts for me, George. So on Tuesday, Apple launched Apple Pay Later, and it allows users to split purchases into four interest-free payments paid over six weeks with no additional fee.

Hate it. So you buy something for $100, Apple Pay, while you're checking out with Apple Pay, says, hey, why pay $100 now? You can pay $25 now and pay the other $75 over the course of six weeks. So you're paying $25 a week for a $100 purchase. Ish. It's over six weeks.

Okay. So there's no interest or fees. You're not paying any more for the product. So people out there are going, well, George, Jade, what's wrong with this? What's wrong with it? There's so many things wrong with it. Keep going, keep going, keep going. So here's what happens.

Prior to making a purchase, Apple Pay later users can apply for a loan. So I'm glad they call out that it is a loan, people. Why, guys? It's not a loan. Between $50 and $1,000 is what you can use this for. Oh, my gosh. You can use it for in-app purchases, online, retailers that accept Apple Pay, which is pretty much everyone these days.

And so Apple conducts a soft credit check. They review your credit score, and they promise that this process won't impact your score. And if you're approved, you'll see all of these payments in your Apple wallet. And so it's built into Apple wallet. It'll show exactly what you owe. And that's it. You're applying for a loan right at checkout. And so as you spend during the week, you have all these tiny little micro loans that you owe money on. Now you're wondering, what's the catch, right? Because it's a 0% interest rate. There's no fees.

Four payments over six weeks. But here's the catch, Jade. Apple makes money from the transaction fees. Yes. Right? The swipe fees, the interchange fees. So when you make a purchase, Apple gets a cut of that. And so Apple stays out of the fray here.

You know who you're going to hate? The bank. The bank. Because what happens when you have 17 payments and you can't budget for that and so all of a sudden you overdraft because you didn't realize how much you actually spent because in your brain you spent 25 of that amount and now you overdraft and that incurs a 35 fee 40 fee every single time it overdrafts i am just beside myself i need for people to understand if $100, look, I don't want you putting anything on payments, but if $100 purchase or a $50 purchase, you're like, you know what?

Let me just spread this out over six weeks. You can't afford it. You ain't got no money. Here's the worst part, Jade. The VP of Apple Pay, her name's Jennifer. She said in the press release, she said, well, we built this because we care about the financial health of our users. That's what because we care about the financial health of our users.

We had the financial health of our users in mind, and we want them to have flexibility, Jade. That's all it is. Here's the thing. Why spend all that money now? They have other bills to pay. Okay, then let's let the viewer weigh this, or the listener, I should say, weigh this. Are we going to listen to Jennifer, who we've already understood is getting a kickback every time you go into debt?

Or are you going to listen to just me and good old George here on the radio who are making no money off of this? We just care about your wellbeing. We understand the damage that debt does to people. Like you're eroding your future for a $25 payment. If you didn't have the $100 today or the extra $25 today,

chances are you're not gonna have it next week. You're not gonna have it the week after that. And then I'm just thinking about just the generality of this. Like if you're spreading money and payments over weeks, most people aren't getting money every week. Most people are on a, you know, they get paid twice a month or once a month,

that sort of thing. Like this is a bad, bad idea. This is a bad, bad, bad idea, George. Here's a financial concept. Don't buy things you can't afford. It's so old-timey. And so let me make this very clear for all of you watching out there. Apple doesn't give a rip about your financial health.

They exist to make money. They are launching this to make money and steal market share from all of these buy now, pay later companies that are out there. And more than that, you can tell by the type of debt this is who it's aimed at. All right. The folks who've got a little bit of money, they're not doing buy now, pay later. Buy now, pay now. It's buy now, pay now. This is aimed at lower income people, people who are living paycheck to paycheck, people who are already struggling

and they're making a bad situation worse. And I can't stand that, George. I cannot stand companies who their entire income structure is based off of you or me failing. You or me defaulting. You or me not being able to make ends meet. I hate companies that earn money that way and

i for one refuse to participate in it and i hope that you do too man this is this is terrible stuff this is this is like the payday lender this is like the digital payday lender yeah but it looks better because there's no interest in fees they go well jade it's a great option but here's here's what clarna found and they brag about this to retailers. These buy now, pay later companies, they're scum. Klarna on their website bragged to retailers that consumers will spend up to 45% more if you have buy now, pay later on your website. Wow. And here's the thing.

They're telling you what they're doing to you, and all of you out there are going, sucks to be them. And yet on Twitter, if you look up any of these companies, you'll be like, oh, dang, Klarna going to kill me this month with all these payments oh well yolo i hate it this is the mentality of a generation but here's the thing and here's where the internet gets us because most but i'm going to be careful how i say this most of us who use buy now pay later we would not be willing to walk into a payday loan store because you feel the stigma you see it you know it's always in that side of town or it's always you know you don't want to walk into there and

you don't want to you know tell your friend hey I'll be right back I'm just going to the payday loan store you don't want to tell them that but because it's digitized it looks fancier it looks sleek it's like hey it's just buy now pay later but I guarantee you we wouldn't do that if it was put in a different format do Do you know what I'm saying? Oh yeah. I mean, it lives in our pocket. It lives in our pocket. There's no shame. It's just us. And here's what it is. It's frictionless spending. And the more convenient we make it, the stupider we get and the more broke we become. It's that simple. Yeah. Talk about that, George, the frictionless spending, because we know the studies around that, the difference between how

your brain actually functions when you spend money with cash versus plastic versus really nothing, just the magic of the interwebs, right? When you go to the grocery store with $200 cash from your envelope system because you're working this plan, it physically pains you to hand over $200 in cash and you lose that money. Yeah, those centers in your brain light up because it knows this hurts.

You had that cash, now you don't have it. The cashier has it. When you use a card, any card, debit card, credit card, you don't feel any pain. You swipe and then you leave with that card and you leave with your groceries. And so your brain says, that didn't hurt at all. And now with our phones, I don't even have to pull out a card. Oh man. I just hold my phone over it and then the phone says, hey, why spend a hundred bucks? I'll give you 75% off. Just spend $25 today. We'll worry about the other payments later.

And what does that do? It causes you to be broke because you can't mentally or physically budget for all of these different payments coming out. And in your mind, you're saying, well, I'm giving myself flexibility. No, what you're giving yourself is acid reflux down the road when that thing overdraws on your account and now you're getting dinged for 40 bucks a time and that keeps happening the overdraft is going to be banks so billions of dollars from overdraft fees oh yeah and apple's genius in this because they go well they're not going to be mad at us we didn't do anything wrong it's on the banks it's on the users i want to know

okay and meanwhile their apple is the one conducting the soft credit check yes right they want to make sure you're in good financial standing if they're going to loan you a thousand bucks oh my gosh it's just so bad that in a second somebody can say you're in good financial standing just in a second think about think about this think about how long it would take you for those of you who you know don't really budget don't really you're you're getting on track with your money think how much time it takes you to sit down you look at your expenses you're listing everything out and it takes time to see really what the state of your finances are absolutely but apple knows apple knows in in three hot minutes whether or not you can be loaned money

they're telling you hey we know the state of your finances we think you can afford this we're going to issue you this line of credit. Come on. Does that really? Does that even? I really want to love you, Apple, but you're making it difficult. And I'm doing my best Ted Lasso impression with my track jacket today. And it's really, I was going to watch the new episode tonight and I don't want to now. Well, they're jumping. I've got a bad taste in my mouth.

They're jumping on that bandwagon of easy money, taking advantage of folks, taking advantage of the least of these financially. Here's a wild idea for Apple. Maybe make a better product if you want more money. Maybe innovate a little. God, Steve Jobs is rolling around in his grave right now going, really guys, this is what we've come to? Being the payday lender of America with Apple Pay Later? Just say no.

Your wallet, your budget, your financial future will thank you for it. Got him. This is The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. This is The Ramsey Show. Open phones at 888-825-5225. We are headed to Boston, Massachusetts, and Chelsea is on the line. Chelsea, welcome to the show. Hi, thanks for taking our call. Sure. How can we help? Well, speaking of things that you cannot afford, my husband and I bought a house in August, and we are having some buyer's remorse, and we're now wondering if we should sell our house.

Oh, okay. Walk us through what happened. Well, a few months after, so we got married in august and also butter house um and we we instantly had the buyer's remorse because that was about the time we got into dave and baby steps and um the house is definitely not what he recommends um but then i also lost my job so that was about a hundred thousand dollar um pay cut um and we've been working with a financial advisor and we've cut out everything and we're on baby step two, but we were barely making ends meet.

And last night, we had to spend about $10,000 to save our puppy's life that we didn't plan on. I'm so sorry. You guys have been through it. We have. It's been a rough I mean, our mortgage is now 52% of our total income. Of take-home pay?

Of take-home pay, yeah. Okay. And, yeah, so we're debating selling our house. We think we have maybe a little bit of equity and just renting and starting fresh, but we didn't know if that was a terrible idea. So are you working again? What's your current income? I am. I took a job that I actually really love, but I'm making about $48,000. It's a lot of

commission-based, so it has the potential to make a lot more than what I was making, but it'll probably be about six months to a year before I really start seeing those commission checks. Okay. And what's your husband's income? He, we own a gym, so he brings home, it's kind of, it's different since it's self-employed, but probably around $100,000. Okay. So let's say $150,000 household income before taxes? Mm-hmm. Okay. What other debt do you have?

We have $125,000 in debt. Most of it is student loans. We have one car. We sold our other car. We now have the $10,000 that we had to put on a credit card for the dog. And then we have a couple other credit cards. It totals about $6,000. Okay.

Now, assuming with this mortgage payment, you guys don't have a lot of wiggle room at the end of each month to even throw at the debt. Nope. We've cut out everything that we can. Excuse me. We've cut out completely everything that we can. So it's, we're actually, we use every dollar, and when we do our budget, we're about negative $100 every month,

and we've just kind of left out. And that's with you guys really dialing in the budget? Yep. Just between the debt payments, the mortgage, and paying just straight of left out. And that's with you guys really dialing in the budget. Yep. Just between the debt payments, the mortgage, and paying just straight-up bills. I mean, you're not doing any frivolous spending, it sounds like. You've played that game. We're not. Yeah, we have no frivolous spending.

We've started using cash to buy our groceries. Do you guys have any savings in the bank or anything you could sell? We're upside down in the car that we do have, which is why we didn't sell it yet. We had a thousand dollar savings that is now gone as of last night and no, no other savings. What's your home worth? Like what'd you pay for it and what's it worth? We paid $769,000 and two, it's a new development neighborhood, and two other houses in the neighborhood recently, one recently sold and one is currently on the market,

and those sold for about $850,000 to $915,000. Okay. And you said you have a little bit of equity. Well, so we only put down, I think we put down 5% because it was my first home purchase and we did a 30-year mortgage. So we owe $750,000 and we're thinking we can maybe sell it for $850,000. Okay. So you might net a little bit of cash that would help you start attacking this debt, but it's not like a silver bullet.

Nope. Because now we we got to pay rent and we still have probably 75 grand worth of debt to tackle. Yes. Have you priced out some of the rents in your area compared with what you're paying now? We did. We did that right before we called you. We could probably rent something for about $3,000. So that would save us about $2,200 a month. So your mortgage payment is $5,200 a month on a 30-year? Yes. Man, I got to tell you, Chelsea,

I hate telling folks to get out of their house, George. That's a big move. I actually rarely tell people to sell the house, but this is one of those situations where I wouldn't be able to breathe if I were you. She can't breathe. We can't. Y'all can't breathe.

I mean, you've cut down your budget to nothing. It's a skeleton. you she can't breathe we can't we can't y'all can't y'all you can't breathe i mean like it's you've cut down your budget to nothing it's a skeleton you're both working and i know there's probably some months where the gym is doing better than others but you don't know that and you're on commission and and here's the thing when you're on in debt and you're working it changes the way you work you've just got that thatzed mentality. So it's probably not doing anything to help you in your job right now. Do you know what I'm saying? Am I right? Yeah. You don't want to be a desperate salesman. You don't want to be a desperate salesman. I hate to say it, but something tells me the moment that

you break free of this, you're going to exhale and you're going to be like, oh, thank God we can breathe again. I would at least start the process. Reach out to a realtor. We have some great Ramsey trusted real estate pros you can connect with at ramseysolutions.com. And to start the process, see what the market's actually doing, how much you could get for the house. And while you're doing that, I'm going to start working my tail off to see if we can get some traction and maybe have an ultimatum and say, hey, if things aren't in a much better place three or six months from now where we can see the light at the end of the tunnel, we got to sell this house. This is the monkey on our back that's killing us. And here's another reason beyond the money. You guys are newlyweds. You're starting out life.

You don't want to start out life. There's enough stuff that you're learning being newly married, right? You don't want this pile of debt just making matters worse or making matters stressful. Like that first year of marriage is tough enough. Can I get an amen, George? Amen. Is it just me? Okay. I'm just saying, I think that, I just think in the long haul, it's going to serve you,

serve you better. And you'll have a home that's a blessing and not a burden. And most of the time people have done this, they look back and go, that was the right move. Rarely do they go, oh my gosh, if we wouldn't have sold our house, it could have been this much. No one's thinking about appreciation. All you're trying to do is survive in this state. And so it really does, it will speed up this process of helping you guys become debt-free much faster. And then when you go back to buy a house the right way, it's going to be a blessing in your life instead of a curse. That's right. When you save up 10 to 20% with no payments in the world, and probably more because it's freaking Boston and homes that are crazy expensive.

Yeah, they're crazy. And so it may be another five years before you guys are homeowners, and that's okay. That's all right. But don't believe the lies that everyone needs to jump into home ownership it sounds like you had some pressures in your life we're like hey you're married now you got to get a home what are you doing wasting money on rent was that the narrative um it was more like we had it was just like i said it right before we got into dave and we had justified it as we were paying separately before we were living together um about 8 000,000 in rent. His was $3,000, mine was $5,000. So this was saving money in our mind.

Goodness gracious. $5,000 for rent? Wow. Yeah, Boston. I do have a question because I've heard that, I guess someone told me once that if you sell your house before two years, you get some kind of fees for that. You will have capital gains, yes. Okay.

15%, right, George? Mm-hmm. It depends on your incomes. I'm guessing with your incomes, it would probably be, it may count kind of just extra income at that point, because it's been under a year. Yeah, if your income is, it looks like if your income is, if your taxable income is more than, between $41,000 and $459,000.

Okay. 15%. So I would also look into the tax implications. It may just be a net wash and that's okay. We're not selling this house to make a giant profit. We're doing it to get out from under this giant payment. And like you said, it's going to free up $2,200 a month. Plus that's barring nothing else goes wrong with the house. I mean happens if the hvac goes out tomorrow right and well luckily it's a it's a new construction so we're you have a one-year warranty in that way but yeah we do well why we're talking while we're talking about fees or things that might come up i gotta say this right quick i gotta talk about this dog right quick because when it comes to these vet bills and you just got through something where you spent $10,000, you need to put a cap on that. Because if Rover is still not doing so well and something pops up later, you've got to have a cap on what you're going to spend on this.

You can't continue to go into debt for a pet. I'm sorry, but you can't do it. Sometimes it feels like dog ownership is more expensive than home ownership. I know. I know. I just lost a lot of friends on that. She's just telling it like it is. Well, we are rooting for you, Chelsea. Thanks for the call. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm George Camel, joined by Jade Warshaw. All right, let's clear something up. If you listen to the show for 10 seconds, you'll find out we are not a fan of debt. In fact, we hate it. And some people, they don't get that. They think you need debt and you need credit cards to build your credit because you need a good credit score

to buy a house, right? Wrong. That's a myth. The truth is, if you're living a debt-free lifestyle, eventually you won't have any credit score. And you got to find a good lender like our friends at Churchill Mortgage who can do something called manual underwriting with a no score loan. That's where they personally review your financial history to approve you for a mortgage. Very old timey. And this way you can avoid the credit score game altogether. I have done this. Jade Warshaw has done this. And so we can tell you from personal experience, you don't get a vote. Your opinion doesn't count here. It's something that people can do. People do it all the time. So this might sound crazy, but the best plan for your future is to avoid debt, save a big down payment and get a real estate agent who will

help you find a house you can actually afford. And we recommend agents who are Ramsey trusted, meaning they're top performers with years of experience helping people like you do home buying the right way. None of this is impossible. You can buy a house without a credit score. You can find a house that will be a blessing, not a financial burden. And you can find a real estate agent who will help you do all of that by going to ramseysolutions.com slash agent. That's ramseysolutions.com slash agent. All right, let's head to the phones. Lexi joins us up next in Phoenix. Lexi, welcome to The Ramsey Show. How are you doing? Good. How are you guys? Doing great. How can we help?

I'm just looking for an opinion on how much we should be spending on a minivan. Oh, fun. We always kind of go as cheap as possible with our cars and we had a salvage title one for a while and it bit the dust a few days ago. So we're trying to decide if it's a good time to spend like $30,000 on one with low mileage that we'll just drive until that dies as long as possible. Or if we should stick to closer to 10,000 and buy one with higher mileage, because we're hoping to buy a house within the next year. Do you have any money set aside for something like this?

Yeah, we do. We sold our townhouse recently and we're just renting for a year. So we have about 250 set aside for a down payment on top of our six-month emergency savings. Awesome. And no debt, I'm assuming. Yeah, no debt, none at all. We're like, we should do our debt-free screen, but we're about to go. Yeah, congrats. So you have $250, and you would dip into that to pay for the car? Yeah, and so we're just deciding how much of that to dip into.

I'd try to keep it as low as possible because I'd want to make sure I have, you know, as much of that nest egg going into that home purchase. Yeah. What's your household income? Yearly, we're about $90,000. Okay. Because what I'm wondering is if you did dip in, let's say for the 30, that takes that account down to $220,000, then how much would you need to put down for the house and would it get you there within your timeline? Yeah, the houses are about 450 here where we want to buy and for about the level of house that we need. So it's like we can afford it even without such a big down payment, but we want to have it paid off as soon as possible. Well, making 90 and having a $200,000 home loan on a 15 year, that's going to add up as part of your take-home pay.

So my goal would be for you guys to do a 15-year fixed where the payments no more than a quarter of your take-home pay. And that will help dictate how much down payment you need. And if it means we got to wait another six months because we got a minivan, then it takes another six months. But I wouldn't shortcut that process. That's a good point, George, making sure you're doing the math on both sides of it, making not just planning for the car, but also making sure that you're able to get the mortgage that you want the best possible way.

Now, when it comes to a minivan, it's so dependent on the brand and where you're getting this car from and the condition of it. And so do you have a specific one in mind? Yeah, we do. It's the same one that we had, just the newer, you know, we just need a newer version and preferably one without a salvage title this time.

We ran into so many problems. What is it? Basically, it's a Chrysler Pacifica. Oh, yeah. I've had some of those as a rental car. Those things are sweet. Yeah. I'm not going to lie.

If you say so, George. Everyone that hates on minivans, next time you're getting a rental and you step into one of those things, it's luxury. It's a sweet ride. Yeah. With little kids, it's our only option. It's the only thing we even want. Yeah. So I would say get the van that you want, knowing that it might set back your home savings goals by a little bit. That's tough. And so that might mean we go for a $20,000 because, man, it's going to lose in the extra $10,000 to go for the $30,000. And minivans are just expensive. The car market's still crazy. So if you go for the $10,000, you might have some repairs closer down the road. That is true. I feel like I'd go the opposite route. You go as cheap as

possible? Well, not as cheap as possible. And mind you, this is not right or wrong what I'm saying. I would go, I would start with the house and I would say, okay, if I do my calculations, how much money must I have to get this house? And then with whatever's left, that would kind of be my van budget. Because I wouldn't really want to sacrifice waiting on the house for the van. Yeah. I'm in a weird boat where I go, how do I create extra income to where this doesn't hold us back? Facts though. I love that. So that's a cool goal to have too. And that's something we did was go, all right, I'm in a weird boat where I go, how do I create extra income to where this doesn't hold us back? Facts. I love that. So that's a cool goal to have too. And that's something we did was go, all right, I'm going to get the 30,000 van, but I'm going to make up the difference with side hustles.

And I'm willing to work it out. So either way, there's sacrifice. And so it's just depending where you're going to do that, how you're going to do that, when you're going to do that. You guys have done an incredible job. I'm so proud of you. What I love about these conversations is we're talking about options, which is a great thing. When you're handling your money right, you're walking through these steps, you're doing the right thing. Then we're talking about what's better, this or that. There's not really a quote unquote wrong answer here. It's just like, how do we want to get there faster? Is it this or that? And I love those conversations. It just proves that you're doing things the right way. So

very cool. I love options, plural. Most people that call into the show when they're in a bind, it's just option. And they think, well, this is the only option. I got to go take out the HELOC. And we go, no, no, no, no, no. How did you back yourself into this corner? You've got options. But when you're debt free and you got a pile of money in the bank, it changes. It's fun to have the conversation. It changes the way you live your life. Love it. Thanks for the call. All right. Let's go to Mila in Portland, Oregon. Mila, welcome to the show. Hi, thank you for taking my call.

Sure. What's going on? I have a question about a budget. We finally talked my husband into sitting down last night and going over a budget with me together because I've been talking to him for about a year and he's like, yeah, yeah, do whatever you want. And I'm like, no, I want to do this together. So we sat down yesterday and, um, some of his responses, I was kind of shocking. He wants to put away a thousand

dollars from each check we get, like we get paid twice each of us. So that's $4,000 a month he wants to put away. And to me, I don't know. I just call it finance. Is that reasonable? Well, there's so many more questions. How much are you guys bringing home, and what's the goal of saving this money? So he kind of got lit up because he wants to buy property. He wants to buy a house or land to build on. And he, um, we're bringing home

anywhere from eight to 10,000 cash or like. Is that your take home pay? Take home. Yeah. Okay. So leaves you with what? Four to six? Yeah. I calculated, we spent about $3,000 on like bare bones. And so that's almost half of our income he wants to save into a money market account or high yield savings account, sorry. Do you guys have any debt? No.

No debt? No, we're really frugal people. We don't spend a lot of money already. And so for him to say that, I was like, we don't spend any. And you have an emergency fund? Yes, we do have money in the bank. We have about, I don't know, $50,000 maybe. That's great. Awesome. And so that's way more than six. You said your bare bones are three months. So even six months

of expenses is 18K. Yeah. So let's call it 20, right? Okay. 20,000 for your emergency fund. You have 30,000 liquid cash. You can do what you want. And you're saying he wants to save it $20,000, right? Okay. $20,000 for your emergency fund. You have $30,000 in liquid cash. You can do what you want. And you're saying he wants to save an extra $48,000 a year to buy a house. Yep, $48,000 a year. Is this a house for you, or is this a house for, like, I'm investing in real estate? No, he wants to. We have a smaller property, a very small home.

And so he wants to have more land around the house. So maybe buying a house with a little more land on it. So do you got your homeowners right now? Do you have a mortgage? Yes. Yes. It's a very low mortgage. What's left on it?

$80,000. 80. Okay. How about this for a cool goal? Let's pay off the mortgage first. You're building the equity. It's a forced savings plan. And as soon as we have that paid off, we can start stacking up that cash.

But I think it's a wise goal. As long as you're investing 15% into retirement, the rest, the world's your oyster. But be on the same plan. If you want to do three and here's why, have a why when you come to the conversation. Yeah, I like that. Versus, you know, I think it's a great muscle to build, that savings muscle. It will serve you well as a couple. Thanks for the call, Mila. That puts this hour of The Ramsey Show in the books. My thanks to Jade Warshaw, all the folks in the booth, and you, America. Thanks for listening. We'll be back soon.

Hey, what's up, guys? It's Jade. Look, if you like what you heard in this episode and want to know more about getting started on the Ramsey baby steps, go to ramseysolutions.com and click the get started button. We'll help you figure out the best next step for you based on your specific situation. That's ramseysolutions.com and click get started.