The Ramsey Show - App - Sacrifice Isn’t Comfortable but It’s Worth It! (Hour 3)

Episode Date: October 5, 2023

🎵 Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships. I am Rachel Cruz, hosting this hour with fellow Ramsey personality and great friend, Jade Warshaw.

And we are taking your calls, America. Free call anywhere in the country at 888-825-5225. So give us a call. All right. Up next, we have Alexandra on the line. Hey, Alexandra. Welcome to the show. Hi, Rachel and Jade.

How are you? We are doing great. Doing great. How can we help? Okay, so I'm in a bit of a situation here. So we purchased a... Okay, so we closed on our house on the 24th of August. Oh, congratulations.

Thank you. I don't know how we got it, but we went in with all we had. I'm kind of desperate, just wanted to get out of a $2,100 rent. And now, yep. And then we're at a $1,400 mortgage now. First time homebuyers, we've been together since sixth grade. We're 37 years old. We have two kindergartners that just started, the twin boys. So this is our situation. We closed, we moved. So we're, I think about two hours north from his previous job. And I say previous because two weeks after we closed, he lost his job. No fault of his own. It was just, you know, a car that was given to him so that he can drive to work. He was doing that, you know, obviously every day. And so now he didn't have a transportation

to get there because I need the car to bring the kids to work, to school, because they just started school this year. So he's unemployed right now. This is my husband. But I'm so scared because, and I'm hoping that he can get into something, right, very soon. We were able to make, so we closed in August. Our first mortgage payment was on the 1st. We were able to make that, so we sent it out. That's done. And it's $1,400, right?

Mm-hmm. Okay. And so now we're having to pay again no on the first um we only have like sixteen hundred dollar in savings um the big thing is if he so we're we're hoping he can get into this new job next week um so it's going to be a little bit of a a pay. So it'll be at $62 a year. He was earning more, closer to $80 a year. But now we're out in the country, farm life, this is what we wanted, this is what we get. He's going to get paid less. Sure. So he's down at $62.

Can you pay all the bills with him at $62? I think we can because if we were already doing it then, and yeah, he was making more, but we were spending much more. And then now I'm like, uh-uh, when I'm doing that, you know, so we can. I know we can. But this is the thing. Let me get to it quick. The RV, we have an RV that is $30,000, a note of $30,000 on it, and the payment is $400 a month. I don't know what to do with it because we're just parked in our land here.

And it's a 2017. We got it desperately in 2021 because we were needing to get out of an apartment that we were living in, and the house that we had, you know, we were trying to get into at that time, the sale didn't go through. So, so that I won't have to release, you know, another contract. We just went to a campground and so we got the, we got the RV and then we just kept house searching. We found the house and then so here we still have it. What can you, what can you sell it for? I don't know, to be honest. I'm sure it's going to be less than what we owe.

Yeah, you'll take a hit on it. But you're just trying to stop the payments and stop the depreciation from taking a hit. Yeah, so we don't have any late payments on it. We were able to make that last month, but this is the month right now coming up. This one in November is the one that's going to hit us. I don't know how we're going to do it. When will you know if your husband has the job? He will find out Monday.

And I think, and I want to go within 90%, they're going to take him on. Yeah. Okay, good. Yeah. And so it's going to be a pay cut, you know? Yeah. So I want you, the first thing I want you doing is you've got a lot going on. And I can tell by the way you're telling the situation.

It's like you're just like in this. And you're just keeping going. And I want to kind of clear your head a little bit tonight. When you get off the phone, you guys sit down, run the numbers. Open up every dollar budget. If you don't have it, Austin will get it to you. And I want you to run the numbers for your paycheck and his paycheck at the $62,000. All right. Then I want you to run the numbers just in case he doesn't get this job and go, what do we need coming in the house to make sure we're able

to fill it? Because once you have those numbers in your head, Alexandra, you're going to feel so much better because at least you'll know what the real numbers are, what the anecdote is, and then you'll be able to make a game plan going forward. What I really want to hone in on, and I think Rachel will do a good job with this too, is I want you guys, there's a lot of desperate moves going on. Everything is, oh, we got desperate and we had to do this.

And then we got desperate and we had to do this and we got desperate. And the chain here, the pattern that's happened is when you guys get desperate, you do, you make bad choices. And I want that, that's got to stop today. So what that looks like is in the here and now, making a plan for the here and now, but not only that, but going forward, I want you guys to be on a plan with your money.

So you know what your goals are, you know what's going, you know what's coming down the pike and you're in control and you're happening to your life instead of everything around you just happening to you guys and you're reacting and you know, you're on the balls of your feet all the time. Um, that's got to change. And I think that a plan for your money is going to help you. Have you ever heard of financial peace university? Um, so no. Um, just recently I started listening to you guys. I, you know, I grew up, I want to say, in the ghetto, to be honest. I never had money in my life. Both my mom and dad just worked just to take care of five of us, you know.

So, you know, I just grew up, you know, working and paycheck to paycheck, you know, rent, rent, rent, rent, rent all my life until we were finally able to get this. And it was through an FHA. That's why I say we got in. Lucky to get it. But, you know, here we are. able to get this. And it was through an FHA. That's why I say we got in. Lucky to get it. But here we are. We're so happy. We have a nice little house. Sure, sure. But also, you're so happy, but you're also very stressed. Okay. So what we want you to see is, and Jade's exactly right, being proactive with your money versus reactive. And you just said it. And I think the way we grow up with money is a huge part of our story. And that's what was modeled for you. But now the beautiful thing is now you get to change that so alexandra stay on

the line austin's gonna pick up and we're gonna give you every dollar premium which is our budgeting app that will will attach to your checking account it will and you guys will be able to bring in transactions you'll be able in real time to be budgeting your expenses what jade was saying and we're gonna give you financial peace, which is our nine lesson course. And you and your husband, you guys need to learn how this stuff works. And Alexandra, I'm going to warn you. It's going to feel uncomfortable.

You said you're new to all of this. And when you, you have to get to this point and you're there, I feel it in your voice and why you called is you're not happy with your current situation. What you guys have done that led you up to this point. Yes, he lost his job. I'm going to say to him, I get it. Stuff has happened. You are not happy with where you are, which means you have to change what you've been doing. And

change is hard. Alexandra, it's hard. And so you're going to be doing some painful things that are going to feel uncomfortable because they're new, but they're the right things to be doing. We are the best in the business at getting people in control of their money. So listen to the plan, follow the plan, don't stray from it. And so looking at your numbers, getting facts on paper is going to give you some breathing room. You're probably gonna be selling the RV. You guys may have to take a second job in order to float the bills for the next month, which is okay. Hopefully he gets his job and you guys are on track, but you guys got to get your crap together because you're going to end up in the same place again.

But we believe you guys can do it. You can. You can. You got to make the change. Welcome back to The Ramsey Show. We are taking your calls, America, at 888-825-5225. Up next, we have Tracy in Phoenix. Hey, Tracy. welcome to the show.

Hello. Thank you so much for taking my call. Absolutely. Thanks for calling in. How can we help? Yeah, this really is going to take a lot of stress off of me. So I have a situation where I just moved from Georgia, and I have a home there that's paid off.

It's probably worth, we haven't appraised it yet, but it's probably worth between 280 and 300,000. Um, I moved to Phoenix and I live in an apartment. Um, and I'm currently, um, you know, just trying to get my credit score up and I'm actually working with the lender so I can purchase a home here. Now, I have the down payment, the 20% to buy a home here. And me selling my house in Georgia has nothing to do with me purchasing here. And so my question is, yeah, so my question is, should I sell my home in Georgia and use some of that money to make the payment lower and to bring it, you know, the house down in Phoenix a little bit lower. And then possibly buy a second home here as a rental and put the other half maybe on that home. Or should I leave that house in Georgia as a rental property? Sell it.

Yes. Sell it. I would say. Unanimous. Yep. Unanimous. Sell it. sell it yes sell it i would say unanimous yep unanimous sell it and i would put everything of that home tracy um that 300 to the home in phoenix i would not look at a second property until that house is completely paid off do you have other debt um i do that's the thing i i just recently paid off a lot of credit cards but but I do have about $158,000 in student loans. Ooh.

Whoop, whoop, whoop. Okay. I feel like you're jumping the gun a little bit. Yeah, we may have a different plan for you, Tracy. We have no other debt. It's me and my husband combined. We make about $195,000. That's great.

Good for you guys. Can I tell you my plan? Can I tell you the jade plan plan this is what i would do i would sell that no no matter what you do you're selling the home in georgia that's we got to get rid of you don't live there anymore and so it's just gonna ask one one number question to help your argument hey how much how much is the 20 down how much cash you have saved in the 20 because we're going to add that to all this the 20 well i have about 25 which actually it's really not the 20 it's the five percent okay oh that's fine how much is it 25 000 i could yeah it's about 25 but i could ask

it through my husband's 401k no no no no we don't do that how much cash tracy do you have saved 25 000 yeah okay perfect okay and now i do have another question so you've got 25 000 saved How much cash, Tracy, do you have saved? $25,000? $25,000, yeah. Okay, perfect. And now I do have another question. So you've got $25,000 saved. Is that the only non-retirement money you have lying around or do you have other non-retirement savings? I have no other non-retirement money. Okay.

This is what Jade would do. I would, like if Jade and Sam woke up in your shoes tomorrow, I'd be like, OK, Sam, I think we should sell the house in Georgia pocket, you know, take home two hundred eighty thousand. And then with that money, I would knock out the student loans and then I would put the rest with the twenty five thousand that you have saved towards a down payment. Now, my next question is that I want to do that. But now let me go back because you need savings. You need three to six months of savings before you buy a house.

She'll end up with about $155,000. So I would put some in savings. Three to six months of expenses. And how much would that be if you were to rough that out, Tracy? Monthly expenses? Yeah like basic basic budgeting expenses let's just say 4k with the kids tuition per month yeah okay so around 25 000 for six months okay so we got we got 143 000 to put towards a house look at that. And you're debt free with savings. Wow. Look at that. Come on, Tracy.

Are you doing a happy dance? That's great. I am doing the happy dance. See, some people are saying you should never sell a house that's paid off, number one. No, they don't know what they're talking about. Yeah. If it was your primary home, Tracy, if that was your primary home and you're still living in Georgia, that's one thing. But you're being a long-distance landlord.

You have an asset, which is amazing, but you also have liability, which is your debt. And so you're able to clean all that up, still get a great house in Phoenix with an emergency fund in place. You're going to be good to go, and you're going to have a lot more peace than trying to finagle all of this stuff. So you're starting on really, really solid ground, Tracy.

I mean, like you're, this is, it's amazing. The houses that you're looking at in Phoenix, considering you have $143,000 left, how much of the houses you're looking at? Like 538. High 30s? No, 538. Oh, 538 high 30s no 538 oh 538 okay and so when you do go to buy a home let's go over these parameters because we want to make sure that it's it works out for you the way we would teach in the way that you know i've always bought my homes is 15 year fixed mortgage where the

payments no more than 25 of your take-home pay that's what're looking for. So if you can do that with the down payment, which you shouldn't have any trouble, but that's what you're shooting for. But the 15-year fixed rate is really where, that's the one where people are like, nah, can I just do the 30? It's like the goal here is to pay things off and to get that ultimate freedom of debt freedom.

So that's why we'd say 15-year fixed and you might get a better interest rate as well by going that route. But is that what you're planning to do? Yeah. The interest rates right now are like 8%. Aren't they high? I don't know if I'm... Yes. Yeah, they're higher. Yeah. Well, most definitely. For sure. For sure. But the 15 year, you'll get a better rate. That's what Jade is saying versus the 30. So yeah. So Tracy, I mean, that's exactly the road we would take and it just sets you up. And you guys make great money.

You'll have about $350 left on the mortgage to be paying off. You're making $200. You guys have this house paid off. On average, we find people pay off their house in seven years, seven to ten years. And it's amazing. And you guys are going to be just trucking along with no debt and just, yeah, it's, it's amazing. And you guys are going to be just trucking along with

not debt, no debt and just, yeah, it's gonna be amazing. So glad you called in Tracy. Glad you called in. All right. We got Peyton up next in Lexington, Kentucky. Hey Peyton, welcome to the show. Hi Rachel. Hi Jade. How are you? We're doing great. How can we help? So I'm on Baby Step 2. I have paid off $30,000. Yay. Nice. Car left. I'm sorry. You have a what? $1,000 car left? $30,000. We are cheering, Peyton. Sorry.

We missed the number. No, thank you. I have an $8,000 settlement coming in within the next four to six weeks, and that will put me right side up on the car because it's worth about $23,000. And I was wondering, I could pay it off by May or I could sell it and be debt free as soon as I get the settlement. What would your decision be? Because I know Dave always says if you can pay it off within two years and you love the car you can keep it fight for it yeah um how much are you how much you make a year 108,000 oh yeah

yeah I would I would keep it you're fine I think the numbers are fine yeah I think you pay it off even sooner honestly Peyton yeah I mean you'll have the 8k in cash to dump at it that's great because yeah that's what i do okay i don't know if it changed anything i have a old beater jeep that is worth maybe a thousand dollars but take me three to four thousand dollars to get it daily drivable um would you still just keep the car and just pay it off by may or sooner i think that part's up to you at that point if i that i mean honestly i think that's totally up to you it depends like obviously the i'm guessing the jeep is not as in as good a shape as a thirty thousand dollar car but it really just depends on the picture of your life that you want going forward either either either way is fine yeah you're gonna get it paid off the numbers aren't so

lopsided that we're like oh my gosh get this car out of here Peyton you know because you're yeah you're able to pay it off within six months which is amazing uh but if you're not attached to the car and Peyton we get a lot of people on this show and they're like get me out as soon as possible I'll throw two grand at this jeep get it fixed up and I'm great driving it around and I'm happy and it's awesome. If that's what you want to do, do that and be out of debt.

Yeah. You know, and in four weeks after you fix the Jeep, you can do that. But also that this car payment or this car loan, it's not absolutely going to kill you. You, you make great money.

You're gonna be able to pay it off and you'll be completely debt free after that, which is just well on your way. So yeah, I'm with Jade at that one. That one's in your court, Peyton, but thanks for the call. That one's in your court, Peyton. But thanks for the call.

Appreciate it. This is The Ramsey Show. Our scripture of the day comes from Ecclesiastes 7, 12. The protection of wisdom is like the protection of money. And the advantage of knowledge is that wisdom preserves the life of him who has it. It's kind of a tongue twister there, Jade. That's deep. I'm going to have to marinate on that one. And Frank said, people can tell you to keep your mouth shut, but that doesn't stop you from having your own opinion.

Okay. I like that. I like that. So good. All right. Up next, we have Paige in North Dakota. Hey, Paige. Welcome to the show.

Hello. My question is, or I guess my husband doesn't want to try and budget every time I bring it up it's a big fight about who spends most money on the most worthless things and I don't know how to handle that it's beyond that it's the tit for tat game you did this yeah well I did that man you do this so how are when when these conversations come up let's kind of retro back a little bit when these conversations have come up have they come up in the heat of the moment or has it been like hey honey or hey boo whatever you call your spouse i want to sit down and talk here's what i'd like to talk about you know um is it that sort of thing

or is it just like this is happening out of the heat of a moment of somebody opening up a bill for something I wouldn't say it's normally like the heat of the moment but it's always like when we go paycheck to paycheck week after week you always scrape in the barrel and then I'm like hey can we try this and then he like gets super mad about it. And then it's just paycheck to paycheck. You know, we've got to start getting on a budget. I think if you kind of approach it in the way of, I'm really worried and I'm really scared and I've just been noticing like my anxiety is going nuts. And I think it's because we're overspending.

I think it's because we are not on the same page and I'd really like to be on the same page. What does that look like to you? Like I'd kind of throw the ball in their court of like, what do you think that looks like? And that way it's not you saying, not necessarily coming and saying, this is what we need to be doing,

but just opening up that conversation. Have you tried that? I have tried that. And I've suggested a few different things like, hey, we put both our paychecks into the joint account for bills and such. You can put X amount, I's use $300 for an example, into your own personal account to spend it on what you want,

you know, gas station, whatever. And then once you go past that, you can't dip into the... Yeah. Okay, so Paige, already, can I say this? Already, it's becoming a Paige is telling... What's your husband's name? Or if you don't want to say. Bob.

We'll call him Bob. Okay. It's already you almost in a maternal role of, okay, we're going to put your money here and you can't do this and this, this, this. It is still this hierarchy of you being the kind of authority in a sense and so the goal would be just to paint you a picture is that you are both a team you both are equal in

this he has as much say in this as you do you have as much say as he does and it's you guys together saying oh yeah this and this and this and this versus one telling one what to do, if that makes sense. And so- Yeah, no, that makes sense. Yeah, and I would say this too, with an asterisk, there's naturally always gonna be more of the nerd

and there's naturally always gonna be the free spirit. So like Winston forever will love Excel and love the budget and love painting out what investments of this, this, this, more than me, which is funny because this is my job and this is like what I do every day, but he actually is more of the numbers

and thrives on that and more of the saver than I am. So he won't change who I am, but the way we approach our money together can still be as a team. So always know that. You still will have your own personalities. He may never just love the budget like Paige does. And that's okay.

But as long as you're both in it together, that's going to be the goal. So I would want to know, do you know his hesitation? What it is that he kind of pushes back against? Or why he pushes back against it? I think he likes to kind of be in control a little bit um i know he's always brought back that before we even got together i had no problem you know with my money but so he's trying to kind of make it you're the blame you know kids are the blame but like live or like our lives have changed since we met, you know. Sure. We live in a different place and things are more expensive

and too good to do through daycare. Yep. So I would ask him then back just to keep the conversation going because I think Jade's point is really good. It's like I want to hear from him. And so like, okay, so you're saying that before all of this, you didn't have money problems, which to a degree, duh, because you didn't have all these expenses, right? That's what we're all thinking.

But also, what did you have in place that worked really well? Because he may have his own way of doing stuff that, you know, you don't see that maybe you actually could implement. And so I think, again, it's going back to this like it's this team mentality which I know is so easier said than done page because we're about to get off the air here in five minutes and and go home and I know you're the one that's having to have these conversations but as much as you guys can sit down and say gosh I feel like this is pinning us against each other and we can't be against each other like we are in this together and we both want to win like like no one wants to choose to have a stressful anxious life and marriage and so and no one's trying to say whose fault it is

like yeah if you and bob can both agree this the problem is it's us it's us like we're we're paycheck to paycheck both of us don't like that both of us would love to get to a point where we've got savings and you know we we're out of debt like if you guys can surround that and like lock arms around that and that's where you're going to move forward yeah and sometimes page especially with guys it's kind of a stereotype so it may not be true for him but i have found like when you can put numbers and actual facts instead of just ideas and theories of cutting back and all this. When you actually see numbers down, sometimes it helps because you can actually blame the numbers instead of blaming each other.

And so I would just say, hey, one night, like after dinner, can we please, and just ask them, can you just give me an hour? And I want to pull out the bills. And I just want to look and like, what if I just want to, and help me do it, right? Bring him in that your page isn't bringing everything and page isn't telling what the numbers are together we're having a conversation so will you just sit down because I want to know like okay what are you spending on

gas and you guys just make this puzzle and lay out the numbers and kind of just do a mock budget together again try I don't want it to be conflict filled or tension filled this is just bringing numbers to the table uh and let that be a starting point. Because I think sometimes in our heads, things can be magnified. In our heads, things can be isolating. There's so much that if we just keep up in our head and in our mind, it just can go sideways. And when things are down and you're looking at actual facts and looking at actual numbers sometimes not always but sometimes that kind of like diffuses the tension um because you see that and then from there you know look at the tactical and then also it's like if it's going well that night or maybe

it's another night dream and just say hey what would it look like in five years what does our life look like how old are our kids what grade are they going to be in where do we want to be like just start to like have this vision of where you guys want to be as a family and there's something about being proactive in that that is so inspiring than just living life paycheck to paycheck month to month and you look up and it's been five years and you don't know where you know you don't know where you're going and so having that i think is really key to page but just know you're not alone in this. This is one of the biggest problems we hear from people is that one spouse is on board and wants to do this

and another isn't. So you're not alone in it. And also we've heard so many couples on our debt-free stage say, gosh, I wasn't on board. I thought y'all were crazy. And then finally I got on board and together we did this. So even couples who win start out where you guys are.

So have hope, Paige, that this can change. It really can. But I think it's really the way you approach it. Don't be the mom. Definitely don't be the mom. Have a humble spirit about it. But bring, you know, this conversation. It's a conversation to be had.

It's not pointing fingers. And blame. Even this picture of put the numbers out in front of you and, like, lock arms. And, like, it's us against you numbers. Like, like you know what i mean it's not us against each other so it's good uh it's powerful page that's a it's a big part of winning is you and your spouse and just for the sake of your marriage not just your money for the sake of your marriage i pray that um that this brings you guys together so thanks for the call jade thanks for a great show today it was good always fun always fun thanks to the guys in the booth to make it happen thanks for the call. Jade, thanks for a great show today. It was good. Always fun.

Always fun. Thanks to the guys in the booth to make it happen. Thanks to the audience that came out today to Nashville to watch the show live. We appreciate you guys. And we appreciate you, America, for listening. This is The Ramsey Show. Hey, it's Rachel Cruz. 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.