The Ramsey Show - App - Rent Keeps Going Up – Here’s What You Can Do About It (Hour 2)

Episode Date: January 25, 2023

George Kamel & Kristina Ellis answer your questions and discuss: Rent prices are going up, What to do with a large settlement, The best way to tackle student loans, Financially preparing for marriage. Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Want a plan for your money? Find out where to start: 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

Девочка-пай Live from the headquarters of Ramsey Solutions, broadcasting from the pods, moving and storage studio, it's the Ramsey Show, where America hangs out to have a conversation about your life and your money. I'm your host, George Camel, joined this hour by Christina Ellis, and the number to call is 888-825-5225. That's 888-825-5225. Well, Christina, I want to kick off this hour talking about something that so many people are struggling with in today's America, and that is rent prices. Here's an article from Axios.com. I'm going to read the headline in my own way, because this is a family-friendly show. Data shows the rent is still too dang high. Yeah, it says the average American household is now considered rent burden with a record

share of renters spending more than 30% of income on rent each month. This is a painful surge for many coming at a time when inflation has driven up the cost of food and energy costs. Credit card debt is rising, spending is falling, and there's a shift in spending to more necessary items rather than luxury type purchases. Well, that's good. That's a good thing. But rents are sticky.

They are likely to climb much further. They aren't likely to climb. They aren't likely to. Oh, gosh, thank God. That that's good i got spooked but don't expect them to fall much from where they are now and of course the surge in home prices in the housing market has pushed this number up and you know inflation supply and demand a lot of factors here but at the end of the day it's just a lot of frustrated everyday people going like this this is insane. My rent went up another 600 bucks and I can't do anything about it. And so we wanted to give you guys some practical things you can do.

There's no magic trick here. There's no silver bullet. I'm not going to give you some life hack. These are all things that take compromise, sacrifice. They're not fun, but it will put you in a better financial situation. Yeah. And we just empathize because we got team members here who've had to move because it's like all of a sudden their landlord raised their rent or their apartment complex raised their rent $400, $600, which that's a lot. Even for somebody who's budgeting, who's living on a budget and being disciplined with their money, it's pretty painful to see those numbers. But we do want to give you hope because there are strategies around that.

Yeah. I mean, right here where our headquarters is, Franklin, Tennessee, Williamson County, I think it's the 10th or 11th wealthiest county in the nation. And so if you work in this area, it's hard to live in this area. And Dave always jokes about when he was a kid, he lived on the other side of the tracks, miles away going like, oh, well, that's where the rich people live. And cost of living is a real issue. And a lot of people who live on the coast, if you live in the Bay Area or you live in New York or Boston or New Jersey, you feel this pain when you're not making $300,000 as someone

who works at Google or someone who just got laid off from Google, more likely. And you're going, what do I do when I make $30,000, $40,000, $50,000 and I still have this crazy high rent? Well, and some people kind of just close their eyes and they kind of make the excuse that like, there's no other option or the, I mean, I hesitate to say excuse because it's like, I feel for y'all and I feel for people in this situation, but the option is not to stick your head in the sand and go, well, I got to spend 50% of my income on rent because it's like, that has very long-term consequences. So we want you to be super strategic and really think through, you know, even though this is crazy

and the market is crazy and it's unfortunate, like what can we do? So for starters, if you are single, this is especially hard for you because you don't have, you know, the possibility of dual income where you have both spouses working, which really helps cover that rent number. And so you might need to go get a roommate and do that in a safe way, of course, vet people through Facebook communities, mutual friends, and see if you can cut all of your expenses in half by doing that. I know it's not fun. If you're a grown adult, to try to get a roommate in your late 20s, 30s, even 40s is hard,

and it feels awkward. But if it cuts your expenses in half and allows you to pay off debt and build wealth, then it's worth it for a season. Yeah. And another thing is to shop around. So one, if you can not be in a hurry when you need to move, that's great. If you can give yourself a little bit of runway, if you know that your lease is going to be up in four months or even in two months and that your landlord may raise your rent, start thinking about that right now and start thinking about, you know, are there other places in the area and do your research. So we actually sold our house last year. And we decided we wanted to rent for,

you know, a bit while we moved down here and kind of figured out where we wanted to live. And I shopped around like crazy. And I'm gonna be real honest, y'all, the rent deal we found was bonkers. But I largely think it was because I kind of got pretty obsessed with the research process. And now I look at the cost and I'm like, that is actually crazy. So, you know, look for those diamonds in the rough. Don't just go, you know, I like this glamorous complex that has this really cool pool. The granite countertops, the hardwood floors, it's been renovated. That may be out of the budget right now. Right. And you may get a way better deal down the street for somewhere that's still really great, but just way more in your budget. And the other thing is go further

down the street, literally further out of the expensive areas. And yes, there may be somewhat of a commute instead of a 15 minute, it may be 30 minutes, but that's worth it if you can save 400 bucks a month. And the other piece of this is a lot of people are now working remotely. So if you're one of those people, you have the opportunity to live anywhere. Let me remind you. And while it's ideal to live in downtown Manhattan, it may be more ideal financially to be further out in Astoria. George, I'm hesitant for you to say that because I'm like,

that means more people are going to come to Tennessee. Come on down. Hey, they're going to be here anyways. Not because I told them to. Oh man, our costs increase so much. And now it's too expensive to live here. So they're like, I'm going further out. But there are things you can do.

And again, none of these are like ideal silver bullets. And hopefully the market comes back down and cools off a little bit and we'll slowly see those rent prices come down. But for now, we also can go make more income. And so if you are making 30 and you feel like you've been in this thing too long, you should be making more. Go apply for those new jobs. Sharpen up the resume.

Our friend Ken Coleman has some great resources at his website, kencoleman.com to help you with that. But if you can make 50 instead of 30, well, that changes the numbers now and we can breathe. And lastly, getting out of debt will help you breathe when it comes to affording your rent. One of the reasons rent feels so crazily high is because you also have $700, $800 in payments on this side because of your student loans, your car payments, the credit card payments,

the personal loans, it all adds up. Well, and just really making sure that you're buckling down on your budget. Like we're pretty intense with our budget, but we've been doing this no spend month and it's been crazy looking at the numbers of how much we saved. Like we thought we were pretty tight on our budget and And at the end of the month, we are saving

so much money. Like we thought we couldn't eat on a hundred dollars a week and we did it. And we found all these other ways to save. So it's like, even if you are on a budget, like really evaluate it deeply and see if there's anywhere else you can cut so that you have a little bit of breathing room. And that's a great reminder, Christina. Our parameters as far as rent or mortgage goes is no more than 25% of your after-tax income. And so if that's you and you're doing the numbers, you're going, my rent is $1,500 and I take home $3,000. Well, that's 50% of your income being eaten up. It's going to be hard to live and to build wealth and to save and to pay off that debt and to put food on the table, to put eggs on the table when that much of your life is being eaten up by

the rent. And so we've got to find a solution and go, all right, we need a roommate. We need to move further out and we need to get on a budget. And so you can jump onto EveryDollar. That's our budgeting tool. You can use it for free and start to crunch these numbers and figure out where we can shave some expenses. How can we figure out how to afford the expenses we really need and figure out what the needs are versus the wants. And we want the nice apartment, but that might be down the line. Once we're out of debt and we increase our income and maybe one day we won't have that pesky roommate leaving the dishes in the sink. That's a tough one for me, Christina. that is i'm glad i have a roommate now and it's my wife best roommate i've ever had gosh no more dudes just the dudes get it together guys oh my gosh all right more of your calls coming up 888-825-5225 this is the ramsey show so This is the Ramsey Show. You know, paying off debt is smart. Saving and investing is smart.

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wrote in, and I like how he puts it, for anyone who has not completed this checkup, do it now. You never know when something will happen and you never want to leave your family in a bad situation. So this is totally free. Just go to ramseysolutions.com slash checkup. That's ramseysolutions.com slash checkup. Do not let an emergency sneak up on you. Protect your family now. All right. Open phones at 888-825-5225. Debbie joins us up next in Anchorage, Alaska. Debbie, welcome to the show. Hi, thank you so much for taking my call. Absolutely. What's going on?

I recently received a $200,000 settlement check, and we are trying to decide what is the best use of the funds, if it would be better to pay one of our loans off on our vacation rental home, or if it's better to invest it or what you would recommend. All right. What was the settlement from? I was a CFO of an organization and I discovered a lot of fraud and embezzlement, and through the process, I received the check. Wow. Wow. Well, usually you were in a terrible accident. So as far as how settlements go, that's one of the better ones I've heard.

Yeah. Yeah. Okay. It's not okay. But it sounds like it was a nasty situation. It was a tough few years. Yeah. Well, I'm glad okay. But it sounds like it was a nasty situation. It was a tough few years. Yeah, well, I'm glad you're past it. And is that money already in the bank? Yes, it is. I bet you're breathing a lot easier now.

So where are you guys at financially? How much money did you already have in the bank? We have a comfortable amount of savings in our bank account and we have no debt except for our um second home which we use um for a vacation home or a rental home when we're not there awesome we have no your primary residence is paid for oh yeah what's left on this vacation property on the mortgage? $500,000. $150,000, which I'm considering paying off, is a home equity line of credit to the other part of the mortgage. So total owed outstanding is $550,000. Okay. Yeah. That would be the next step, is to pay that down.

So unless there's other things you had planned expenses for, like maintenance, repairs, a roof, the HVAC, upgrading a car, I would throw this at that. I would not invest the money. And you all have a fully funded emergency fund, correct? Yeah. And you're investing toward retirement? Yeah, I do have investment on retirement accounts through employers, yes. Are you guys doing 15% into those accounts? No.

What's the amount currently? Whatever is equally matched, roughly about 3%. Are you doing any investing beyond that? No, I think that's where we need some help. So I don't better to use the 200,000 for investment or maybe another rental property, you know, more land. What's your household income? Roughly 100,000. Okay. And how old are y'all? I'm almost in the mid-50s. My husband's retired. Okay, so he's not working.

Does he have any source of income? Minimal. Okay. Yeah. So it's basically all on you, and you're making $100,000, and we want to retire with dignity someday. Yes, but then in addition, we have the rental income, but, you know, that's and we want to retire with dignity someday. Yes, but then in addition, we have the rental income, but you know, that's nothing we can guarantee, you know. I just want

to say I'm glad I'm not the only one that takes a few seconds to think about how old she is. What do I want to say here? Carry the three. That's me now. So, Debbie, here's what I would do if I'm in your shoes. I'm going to increase my investing to 15% in my, you said it's a 401k? Yeah. Okay. Is there, I would put 15% in that 401k. Do you have, you can also use a Roth IRA. And so here's the order you would do this in.

Take the match, which you're already doing. Beyond that, we can max out a Roth IRA for the year, which for you in your 50s, I believe there's a $1,000 catch-up contribution, so you might be able to put, I think, $7,500 in there for the year. So you could max that out and then go back to the 401k and finish out the 15%, which for you would be $15,000 total from your income. Okay.

And then any money beyond that, let's start attacking this vacation property and get this thing paid for. How does that feel? Do you feel like you have margin in your budget to start increasing your investments? Yes. Yes, we do. Okay. How often are you guys at the vacation property? We try to do like three, four months a year, the rest of the year rented out. Okay. And is that ROI-ing well? Is it paying off? What's the net profit per year on that? After all expenses, maintenance, mortgage, all that? Roughly $75,000. Okay. Well, I would use all the profit and try to get this thing paid off before you guys retire. And once you have this thing paid off, let's max out all the retirement we can

so that you don't have to work for another 15, 20 years. Okay. That would be the goal. So I'm using most of this settlement to pay down the mortgage outside of maxing out the Roth IRA for the year. And let's bump up your investment contributions to 15% so that we can ratchet up that compound interest growth over the next decade. And I would encourage you to go to ramsaysolutions.com and look for our retirement savings calculator. It's really fun to play with those calculators. I think a lot of people think like I'm in my 50s, it's not worth trying to save for retirement, and they feel scared that they can't get there. But when you get in those calculators, and you see how much you can save in

20 years, how powerful compound interest is, and that you really can hit an amazing spot within 20 years, it's exciting. So I want you to do that so you can get excited around this. And this is something where you're like, okay, we're going to attack this because in 20 years, we wouldn't be baby step millionaires with paid off houses and your primary residence. And the second one, I think you can get really excited around it. Oh, yeah. And I'm inspired. I just met a nice gentleman out there in the lobby. We go out during the breaks and he let us know, casually, he's a baby steps millionaire with two paid off properties, his primary residence, and now a vacation home in Florida. And he's riding sky high, no payments in the world. And he's been doing this plan, he told us, for 15 years,

really focused on it. I'm sure he still had a good head on his shoulders before that to get to that point and set him up for success. But you can do this. And a lot of people, Christina, they go like, well, it's too late for me. I didn't know this stuff when I was 20. And so I'm now in my 50s. And what's the point? I'm not going to make that much progress. You would be shocked at how much progress you can make in five to 10 years. And a lot of people in their 50s, they're making the most money they've made in their careers. So it's a great time to finally get rid of that debt, have that emergency fund in place and begin maxing out their retirement contributions. Absolutely. It's a great time. And that's why it's just so exciting to see the numbers.

Because yeah, I think a lot of people just write themselves off. They feel hopeless. They're like, it's too late. But it's like, when you see the numbers and you see how it works, it feels like magic. You're like, wait, really? Like if I only save this much money,

I can be here in 20 years? Wow, let's go. One baby step millionaire, that term feels like, well, that's not, I'll never be that. But when you think about what a millionaire is, it's just having a net worth of a million dollars. So what you own minus what you owe, your assets minus liability. So if you have a paid for home, that's worth $500,000 and you have $500,000 sitting in 401ks and IRAs, you by definition are a millionaire. You don't need to make a million dollars a year. In fact, the top three careers that we found in our millionaire study were engineer, accountants, and teachers. People who for sure don't make a million dollars a year.

And the reason is they're process-driven people. They've got a good head on their shoulders. They're not trying to impress people with luxury cars and mansions. They're just going to work every day and putting money away into those retirement accounts. And over a long period of time, that money grows thanks to compound interest. And all of a sudden you wake up one day and you go, oh my gosh, we can do what we want. Yes. We can work because we want to, not because we have to. That's the kind of decisions I want to be able to make as I get older. And that's what you can do when you follow this Ramsey plan. This is The Ramsey Show. I'm George Campbell, joined by Christina Ellis this hour.

Open phones at 888-825-5225. Our question of the day comes from Rebecca in Oklahoma. She writes in and here's her question. My boyfriend and I plan to get married after graduating in May with our degrees in physical therapy. We anticipate starting salaries of $60,000 to $70,000. Our only debts will be our student loans, $115 fifteen thousand for him. One hundred and thirty seven thousand for me. We've started discussing money, particularly paying off student loans and want to get started on the right foot. We already have our emergency funds saved, so we'll be starting on step two when we graduate. We know you guys recommend

staying away from income driven repayment plans and to use the debt snowball method instead. If we're using that snowball, we should be paying off his first. Should we work at paying mine off at the same time or is there a better way to knock out this debt? So the first thing that stands out to me is how she says our only debts are around $250,000. That's a lot of loans. Whoa. Like the word only. Just casually. Ha! Like makes me sick to my stomach for them. That's a lot. And I mean, she's got an emergency fund saved. So I mean, that's... We don't know if that's the starter of $1,000 or if they went then skip to step three and have a fully funded emergency fund. I'm going to assume it's the $1,000 starter. Well,

and the first thing I'm going to say is like, let's level set. This is not only air quotes $250,000 in debt. This is a quarter of a million dollars. Right. This is a big deal. When you make 60. Yeah, you're starting off your married life with $250,000 in student loans. This is a big deal.

Like we need to attack it like it's a big deal. So here's what I'm seeing. If the numbers are adding up, they should be making combined a household income of one hundred twenty to one hundred forty thousand. And they have total student loan debt of two hundred and fifty two thousand. So if you're using the debt snowball method, most student loan balances of that size and magnitude are probably broken out into smaller loans. So I wouldn't see it as we're going to pay off his first, then mine. I would just break it out by each individual student loan and each individual balance, line those up from smallest to largest, regardless of what the interest rates are, and attack the little one first, make minimum payments on the rest. And as you do that, you'll knock them out faster. You're going to free up the payments.

You're going to feel the progress. You're going to stay motivated along the way. You can use visual trackers to stay excited about this, celebrate every little milestone. And it's going to take a while. Hopefully your incomes continue to go up. Physical therapists can make great money. So my hope is that they can each make six figures and they knock this debt out. Within the next, I'm going to give them a timeline of four years. I think they could do this. Well, and I think if you have that mindset shift where you start going, this is a lot of money and this makes me uncomfortable and I want to get rid of it. Like you can pick up extra jobs. You know, you can see if you can take every overtime shift possible for your physical therapy job, like do

anything you can to get this paid off quickly. But first you got to realize this is a problem. Like don't say it's only $250,000 in debt. This is not we'll get to it when we get to it. Right. This is our full-time job is getting rid of this debt. And the good news is that you're young. You're getting married after graduation.

This is the time in life where you have time to work those extra jobs. You don't have kids yet. Like get this out of the way so that you're free moving forward. Attack it scorched earth with aggression so that it's gone. And then you have the rest of your married life ahead free from all of this. And if you want to get aggressive at this and you can get that income up, you know, you could do this in three years. Think about it this way.

If you could throw $84,000 at these student loans every year, which if you're making $140,000 is possible. If you're making $150,000, $160,000, $170,000, it's even more possible. Then we can knock this out in three years. That's exciting. 36 months. This can be out of your life. And so don't wait on forgiveness. Don't wait on the White House. Let's get about the business of getting rid of Sally Mae's prison that she's put us in. Well, George, this just gets me so fired up. Like this topic in general, the fact that there are students graduating from college saying that they only have $250,000 in student loan debt. That is a toxic system that has taught kids that $250,000 in student loans, no big deal,

that everybody takes them out, that they're necessary. It's a rite of passage. We all just take out debt to get these degrees. We're not even sure what we're going to do with the degrees, but let's take out the loans to get them. It's so frustrating, which is why we've got our documentary, Borrowed Future, which is exposing that toxic system. Massive student loan crisis. 45 million Americans are in debt because of their education. And how did we get here? Well, we do the full expose in our award-winning documentary, Borrowed Future, uncovering this dark side of the student loan industry. And what's cool,

Christina, is it's always been available on Amazon Prime Video. We put it on YouTube earlier this year, which is exciting. But now, for the first time ever, it's available on Fox Nation. So you can find shows, documentaries, and movies there that celebrate America. And this is a different kind of celebration of America. This is celebrating what we could be if we got out of this toxic student loan crisis that we're in. And here's what's crazy. The average is now $38,792 for graduates in student loan debt. And Christina Ellis is featured in that documentary, as well as Dave Ramsey, Dr. John Deloney,

a bunch of industry insiders, Mike Rowe, Mark Cuban, lots of thought leaders weigh in on this epic failure of the student loan program and expose how the system is built to work against you. And it's like, parents, if you're hearing this right now, sit down with your students tonight, this weekend, and watch this documentary parents, if you're hearing this right now, sit down with your students tonight, this weekend, and watch this documentary, especially if they're in high school. If they're about to walk towards this cliff, sit down with them, have this conversation,

talk about money, even if it's weird, even if it's uncomfortable, even if they don't really want to hear it, have the conversation. And the great thing about a documentary is it's not like, we're going to sit down and have this boring conversation about money. You can say, hey, can we watch a movie together this weekend? Yes. It feels more like a movie. It's very exciting. Yeah. Thrilling. Twists and turns. But it can save them from so much in the long run. It can really shift their mindset and help them go to school debt free. Absolutely. So tune into Barred Future on Amazon Prime Video, YouTube, and now Fox Nation. Love it. Let's get to the phones. Jasmine awaits in Long Island.

Jasmine, welcome to the show. Hi, thank you guys for having me. Sure. What's your question? I have a question. My boyfriend and I are about to turn four years, and we have been talking about marriage for a little bit. I graduate next year.

He's currently not in school. And we're both tackling individually our own debt. I should be done in the next six months. He should be done paying off his car, which is the only thing that he has, um, by the end of the year. But, um, we, I just don't really know kind of where we should be at financially individually or even together, um, um, before we actually get married because i know that there's a lot of a lot of things to say about for you know like the wedding or the apartment or if he wants a house like he does say that he wants a house but it doesn't have to be very expensive or a big house but he does want to live in a home um i we discussed i told him we'd discuss that later on but i just don't know where we should really be at financially because I want our marriage to start successful.

Love it. When y'all talk about money, how do those conversations go? Do you feel like you're pretty much on the same page or what do they look like? Yeah. I mean, in the beginning, it was a very long, like it was a. For me, I was always a spender. I did not listen to the Ryan B. show. I was very much always, I had the most debt, and I worked to pay that off, and he's helped me kind of motivate me to get me there. And now we're finally both on the same page. So I started financial university.

He has not. Whoa. He's still kind of like, oh. What's he doing? Does he not want to marry Jasmine? He does. If he knows this is important to you, he should be doing it. Yeah.

I've been telling him. He's very close to actually doing it, but we've both come a long way in terms of how we're on the same page about finances. Okay. Well, there's no particular way that you'd have to be this way before you're married. The best thing you can do is to be completely debt-free with a fully funded emergency fund and pay cash for the wedding. Do not go into debt for the wedding. Do it on a strict budget. Weddings can get out of control. Of course, he's going to have

to save up and get that engagement ring. And I would not be jumping into home ownership anytime soon. You guys need to rent for a year somewhere, start saving up that down payment. If you're going to stay in Long Island, it's freaking expensive, isn't it? Yes, it is. That's my worry. It might be a longer journey or we decide we're going to move further away. And either way, it's going to take a little while to save that down payment. Don't let him rush into this because he thinks he's a fancy man now because he's a married man and you've got to have a home. That's a bunch of bull crap. So go slow. Both of you becoming debt-free with a fully funded emergency fund, cash flowing the wedding, that is the best thing you can do.

And I hope he goes to Financial Peace University with you. Otherwise, we're going to have some hard conversations with this guy. Thanks for the call. Welcome back to The Ramsey Show. I'm George Campbell, joined by Christina Ellis this hour. The number to call is 888-825-5225. I know lots of you out there, you've got some goals to improve your money, improve your career, improve your relationships this year. And if you want a proven plan to crush the debt and build wealth, you can do that with Dave's bestselling book, The Total Money Makeover, and learn the seven baby steps to guide you along your money journey.

And if every day feels like a Monday for you and you're not happy with where you're at in your career, it's time to change that. And you can do that with Ken Coleman's Get Clear Career Assessment and learn exactly what you were created to do and what careers fit you best. And of course, if you want to deepen your relationship with your spouse, your kids, your friends, your family, you can pick up John Deloney's Questions for Humans decks, which are super fun and a great way to build those connections, build those relationships. Get all of those books and tools that will take your goals to the next level. Order them today at ramsaysolutions.com slash store. All right, Karen joins us up next in Salt Lake City.

Karen, welcome to the show. Hi, thank you. Sure. My husband and I are working on the plan, and so we plan to have all of our debt paid off by the end of the year. Awesome. We have a very clear plan of how much we want to save in the next five years and that in the next or in about five years we would like to move and to buy a home and that's where it kind of gets tricky for us. We hear a lot of examples on the show of people paying off their homes that cost you know a hundred thousand to four hundred thousand dollars and us, that's kind of like laughable because we don't live in those kinds of states. Over where we live or where we would love to live, which is Colorado, to get a decent quality home with maybe four bedrooms for a family of five,

we would need at least about $500,000. And to be able to do that on, on Ramsey's plan, um, what we've kind of tried to calculate is to have the 15 year mortgage, 25% of our income. Um, we would really need to be making at least 200,000 a year, um, which is, I mean, double what we make now. So you guys make a hundred. Uh, so my husband makes about $80,000, and then next month I'll be opening a daycare at our home here, and I'll be making about $50,000. Okay, so that'll put you at about $130,000. And are you all homeowners right now?

We do. We own a condo in Utah. And how much do you have left on that? So we just moved in here. So we still have 360. It sounds like a ton. So it's brand new. We just moved in like six months ago. Here in Utah, like the cheapest thing you could get with three bedrooms and two baths is like $300,000 to $400,000. So that's kind of why we struggle with the mortgage section. That's what it's worth because we just got it.

So, well, I guess it's more worth like $380,000, maybe $400,000. How much did you put down? About $17,000. Okay. So let's say it's worth $380,000. You get a little bit of equity in there, but you're saying five years from now you definitely want to move to Colorado and the home will probably cost $500,000 that you're wanting.

Yes. Unfortunately, yeah. That's kind of the market out there. Okay. Well, for some reason I'm more optimistic than you, Karen. I don't know why, but I think we can do this thing. It's just going to take more down payment. So it's not that you need to have more income. I would love that for you guys. And I think you'll get there five years from now. You hopefully are

making more than you are today. So how much debt do you have? Some of the issues, we've got about 30, which like I said, will be done by the end of the year this year. Okay. And then we need the fully funded emergency fund, so that'll take a few more months after that. Yes. So we decided that we would be comfortable with $25,000, especially living in a higher cost state for our emergency fund. So we plan on having that done next year. I mean, making $130, I think you guys can pay off $30 and save up $20 in the next 12 months. And with this new daycare, do you anticipate your income increasing significantly? No. So that will be my income with the daycare. Okay. So right now I'm just a stay-at-home parent, but I decided, you know, I want to make money.

I want to do something other than just staying home, but I do want to raise my own kids in the years before they go to school. And so I decided that starting my own daycare at home gives me both of those opportunities. And how old are your kids right now? So right now I just have one and he is one and a half. Okay. And I'm taking your husband probably works like a standard nine to five. Is that correct? Yes. Yes. So the issue that we face, I think that makes us a little unique is when we do move, he will lose his job because it's just based here. So what we're struggling with is kind of either deciding, do we need to move to a different state

where a lower income is livable? Or how can we like find a different kind of job that he would like to do? What does he do right now? So he flips homes. He's a realtor. He works with a partner and they flip homes here. But they couldn't do that in Colorado? So kind of, but his partner lives here and his partner is the one that pays his salary. So it's really based on how things go and how the market is in Colorado by the time we move whether or not his partner wants to keep paying his salary and wants to flip out there yeah that feels like a lot of risk to put on the table could he just be a realtor in Colorado or do that on his own um he could try to just be a regular realtor. Um, that's one of our options. Um, but we

understand that we will have to change jobs or, um, that's what we're kind of struggling with right now is how do we find a job that pays enough to live there? Um, or do we just not live there? Well, I feel like there's a lot of heaviness in your voice right now, and I actually see your situation, and I'm going, the sky's the limit. You have so much ahead of you. You've got time. So if he's looking at a career change in five years, he can figure out, you know, what is the ideal career that I want,

and then start working backwards and saying, what kind of training do I need, and do it now so that in five years he's qualified for a great job. The fact that he's got home flipping experience when you get out to Colorado and you're trying to buy a house, maybe next time you could buy a house that's a little bit cheaper and then do some fixer upper work, you know, to increase the equity pretty quickly. I mean, just hearing your story and hearing what's surrounding these decisions, I think you've got a lot of upside, a lot of great opportunity.

Okay. What's your take-home pay, Karen? If you're making that $130,000, what do you think you'd take home after taxes? So like I said, I haven't started the daycare yet. That'll be about next month that I'll open that. For me, after taxes, it'll probably be about $40,000 take-home for me. And then for my husband, he takes home about $65,000. Okay. So we're talking, you know, $8,500 a month coming in. And so that means we need to get your mortgage to around, you know, $2,100. And so based on my math, if you guys

could put $300,000 down on that $500,000 home in Colorado five years from now, we can do this. And here's what that looks like. You said a year from now, you're debt free with an emergency fund. That means for the next four years after that, we can begin paying down this house while investing 15%. And if you do, you know, 50,000 a year onto that mortgage, you'll have what, 150-ish left on the mortgage, and the home will probably be worth $450,000 by then, right? Possibly. You know, the market's all over the place right now, so we're hoping that it continues to go up. Yeah. But if we just use those rough numbers for rough appreciation, you owe $150,000, the home is worth $450,000, you sell that, you've got about $300,000 in equity to put down on that house. And that's if your income stays at $130,000 for the

next five years. And so you absolutely can do this. Karen, do you want to move? Yes, we both want to get out of here. We know for sure we're not going to live in Utah in five years. We want to be in Colorado. The thing that's hardest for us is trying to figure out, can we make it in Colorado on this plan? I mean, we showed you on paper. Now you just got to believe it. And I think a lot of it is just the weight of this and it just feels heavy. But I'm telling you, when you start to feel the progress, get in debt free, get the emergency fund, start paying the house down, and then look at on paper in your budget, you're going to be like, oh my gosh, we can do this. Well, we see people pay off $500,000 homes all the time.

Like it is very common, even just around here in Tennessee, like houses, that's how much they cost. And people do it. You can do it. That puts this hour of the Ramsey Show in the books. Hey, it's Christina Ellis. If you love the show and want to dive deeper on your money journey, we have a weekly newsletter that gives you trending and helpful articles

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