The Ramsey Show - App - Should I Accept My Mom's Offer To Pay Off My Student Loan Debt? (Hour 2)

Episode Date: February 23, 2021

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🎵 Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's The Ramsey Show. Where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host, Anthony O'Neill, Ramsey personality. Number one best-selling author is my co-host today. Thank you for joining us, America. We're so glad you're here. The phone number is 888-825-5225. That's 888-825-5225. Sarah is with us in Lexington, Kentucky. Hi, Sarah. Welcome to the Ramsey Show.

How can we help? Hi, Dave and Anthony. I have a little question. Me and my husband are debt-free. We've been debt-free for three years. I took a traumatic fall in 2019 and broke my humerus down the slide of stairs and damaged my knee. I've had one knee surgery, and I'm getting ready to have another one.

Ouch. My husband's gone four nights a week week and i don't sleep those four nights because all my bedrooms are upstairs so we're kind of like in a dilemma and he didn't even want to be on dave ramsey nine years ago but now he's turned into a frugal i think we should sell the house since we have no bedrooms downstairs and buy another house in the next over subdivision, our house will price at $159,000, and it's about the highest one on the two streets. And we could add on to it for like $30,000, but then I don't think we could ever get our money back out of it. The houses in the next subdivision are running about $179,000,

but we'll probably only clear like $145,000 on our house. Now, we have $550,000 in 401K, and we have our emergency fund, and we have $16,000 because I've been trying to save to put on another house, $16,000 that we could put on the house, but we'll still be a little bit short. What'd you say your household income is? Our household income during the debt freeze was $84, but since I fell, it's down to $65. Because since 2019, I've only worked like four months each year because I failed, and they tried to naturally heal, then they did surgery the next year,

then now I've had the knee surgery, and I'm going to have to have another one. So I'm only working part-time. Okay. And so you're talking about a one-level house. I'm talking about a one-level house. And I need to stay in my area because I'm like the provider for my mother who has cancer. So I need to stay within like a five-mile radius because, you know, I'm over there every day. So, you know, I probably could find something cheaper farther away,

but then when she calls me in the middle of the night, it's going to take me longer to get to her. Yeah, like if you move 10 miles away, it'll take you five minutes more. Well, she's kind of panicky on that stuff. Five minutes? Well, she gets panicky. I get panicky you going back into debt, too. Well, I think we could have it paid

off in a year well then save it up yeah and just sleep on the couch for the next year because i don't sleep upstairs when he's not there i i literally i what happened was i got up in the middle of the night i made the wrong turn i was disoriented and i went down the flight of stairs and i know that that's emotional i'm. I'm not judging your psychological. That's not what I'm saying. What would I do if I were your husband, if I were you in this situation? I completely agree with your desire to move and get into a one level. I've got no issue with that. If you're within one year of doing that with cash, then do it with

cash or move five minutes further away and do it with cash and deal with a ten minute drive to Mama instead of a five minute drive. Absolutely. Okay. Now, the other thing is they make those stair climber things that you sit in. They're $15,000. No.

But I don't think we can ever get our money back out of that. No. Yeah, Sarah, don't do it. I mean, I think you're trying to come up with all kinds of excuses. Listen to what Dave said. You're able to climb the stairs. Yeah. You just don't want to. Right.

Well, yeah, I mean, I'm able, but, you know, I've never had one knee surgery. You know, it's like a lot of times I'm not good at it. I'm not arguing with you. You know, and let me just tell you how weird I am, okay? If it's this important to you, I would move the living room furniture into the garage and move the bedroom into your living room. I'm so serious. Well, we are from Kentucky.

Well, I'm from Tennessee, so I think we got this figured out, girl. We got it figured out. Listen here. Listen, it's just for a short time, and if it's that big a deal for you to get something that's comfortable, I might rearrange something there on that first level. Seriously, I'd consider that as a temporary measure. It's not a five-year thing. It's like we're going to go camping for four months and five months until we get this money saved up.

But I think you can do this with cash if you're careful or if you'll just make slightly different decisions sarah would you what you really want to do is when you're facing something like this and you've got several very valid things i want a one bedroom i mean i want a one level i and it's a reasonable request don't you think absolutely then but don't put so many other constraints on it that you can't make your solution true yes like i have to be five minutes from mom instead of 10 minutes from mom oh no see now that one's silly yeah that one's silly she could be 15 minutes yeah and and still and go move today right or sleep in the living room for a year yep uh or move your bedroom to the living room for a year. Yep. Or move your bedroom to the living room for a year. Or go into debt and pay it off in a year. But I don't think that's the way I would do that in this situation. Me, I'm telling my wife, we're going to move away 15 minutes so we can give you what you want right now.

I'll tell you what the other thing you could do. You could sell the house today. Absolutely. And rent a one-bedroom for a year. Yep. Now, that's even a better plan. I like that plan. Except for the move two times part, which I'd rather have a root canal, because the move two times thing is awful.

But, yeah, that solves the problem very, except for the two moves. Yeah, but they don't have to move in one year, Dave. They can stay there for, you know, two, three years. And pile up a bunch of cash. Exactly. And get an even better one. Exactly. One level. I keep doing one bedroom. One level, one level, one year, Dave, they can stay there for, you know, two, three years. And pile up a bunch of cases. Exactly. And get an even better one. Exactly. One level. I keep doing one bedroom. One level. One level. One level. Yeah. It could be

a one level, one bedroom, you know. I mean, well, for rent. For rent. Yeah. That might be your answer. I like that answer, Dave. And you can move just about anywhere if you're renting for a short period of time. And she can save within five minutes. Yeah. Yeah. That might work. That might work.

That might work. That's another idea. But I think you're so close. If it was going to be five years to solve the problem, I might solve it differently. Yes. But because it's one year to solve the problem, I'm going to figure out a way to push through that. And avoid the debt.

Your husband doesn't want to go back into his house and everything's paid off. I can empathize with that. Yeah. And also empathize with you hurting and you don't want to make a wrong turn in the middle of the night and start this healing process over again. I have no issue with that at all either. Hey, folks, how do money conversations go with your spouse? Do they end in a battle or are they not happening at all? Guys, you can get on the same page with money.

It starts with both of you committing to a budget every month. With a membership to Ramsey Plus, you and your spouse get our premium budgeting tool, EveryDollar. It connects to your bank and to both your phones, so everybody knows what's going on. Everybody's on the same page. We're working and making changes together. And with access to Ramsey Plus courses like Budgeting That Actually Works, you'll learn exactly

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It includes Financial Peace University, the Baby Steps Tracker, and of course, the premium version of EveryDollar. Lots of other goodies in there as well. Smart Tax is free right now. Get your taxes done free. Yeah. Wow. With more frequency than you know, I get calls and emails from people dealing with the recent loss of a spouse or a parent. You can hear the struggle and the heartache that they've been experiencing.

And at a time they should be grieving, what breaks my heart the most is the strain and tension that they're going through because of money, especially when it's a situation that could have been avoided. If you have a family, it is your responsibility to have term life insurance. It's one of the things you do to say I love you. And yes, this is an ad for Zander Insurance. But since this is one of the most effective ways I have to get my point across, so be it. For over 20 years, I've been telling you about the importance of term life insurance

and protecting your family. Listen, you need to check out Zander.com or call 800-356-4282. I can't say it enough. Protect your family. It's what you're supposed to do. Go to Zander.com or call 800-356-4282. Anthony O'Neill, Ramsey Personality, is my co-host today. Our question of the day comes from Blinds.com. They have a 100% satisfaction guarantee. That means even if you mismeasure or you pick the wrong color, they'll remake your blinds for free. You get free samples, free shipping, and with the new promos they run every month, you'll save even more.

Use the promo code RAMSY to get the best possible deal. Today's question comes from Terry in Louisiana. She says, my father recently passed away, and my mother received $320,000 in life insurance. She is debt-free and says she doesn't need the money since she has enough assets to live a comfortable life. I have $120,000 in student loans that she wants to pay off for me because she feels like this is what my dad would want. I have started following your baby steps and have been gazelle intense for the last six months attacking my debt. This would get me very close to being debt free.

I want to honor my father and never be in debt. I am feeling torn about this. Do I accept the gift? Yes, I really do. I mean, I would definitely have a conversation with my mom and make sure she doesn't feel that you're trying to force her into it. But I agree. If it was my daughter and I passed away and left this, I would definitely want the money to help my family proceed forward in life. And paying off the debt will be a good steward, in my opinion, of that.

As long as your mom is taken care of. Yeah, that's what I'm concerned about. The reason I'm concerned about it is you didn't tell us how much money she's got. You just said she has enough to live a comfortable life. Right. And some moms, a comfortable life is a can of soup a day. That's good. If her daughter gets all the money and she barely makes it by because she's broke.

Yeah, good point. And she calls that a comfortable life, but she took care of her daughter yeah uh so i don't know what a comfortable life in air quotes means if it means she's got a million dollars in a 401k and this is an extra 320 on top of that i'll go with that yeah if it means she can live off of her Social Security. And be struggling. No. At $1,200 a month. Right. And calls that comfortable so you can have this money.

Yeah. Eh, wrong answer. Right. No. So I need a better definition of comfortable life. But if she, you know, has enough assets to live a comfortable life. So she has some assets. So it's not Social Security.

But, you know, what's really there? That's what I want to know. Yeah, I agree. But, you know, the more money mom has, the more I go with your answer. Yes. Yeah, I would definitely accept it. Now, the other piece of this is you cannot give someone that much money without a gift tax being imposed unless you do it properly.

And so you need to see, your mom needs to see a tax attorney or a tax professional to help her file what's called the Unified Estate Tax credit exemption. And she needs to use up some of her estate to avoid paying taxes on this. Because if she gives you more than $15,000, she's going to be taxed at 55%. And so do not just write somebody a check in your family for $120,000. The IRS comes in and audits you. You're going to get hammered. And so you need to have some professional tax guidance, and it's a very simple form, and it's called the Unified Estate Tax Credit. And you need to do that to avoid the gift tax if you guys go forward with this.

And we only go forward with this if mom's definition of comfortable is really comfortable. Really, really, really comfortable. Tracy is in Tacoma, Washington. Hi, Tracy. Welcome to the Ramsey Show. Hi, Dave. Long-time listener and fan. Thanks for my call, for taking my call.

Sure. How can we help? All righty. So my husband and I owe $160,000 on our house, and we currently have $100,000 cash. So we thought about refinancing, but our previous loan person said it's best to do a credit union loan as rates would be lower and you don't have to pay closing. They're right.

It'll only be like a $60,000 loan. They're right. So I was wondering what you would do. They gave me like a ton of different options. It's pretty overwhelming. And just as a side note, my husband has MS, So we have, you know, our six-month fund and everything like that. So we're just trying to get our monthly payments as low as possible in case something was to happen with his diagnosis. Your husband has what? Multiple sclerosis.

Oh, MS. Okay. Yes. I didn't hear you. How long has he had that? About a year. Okay. And what's your household income? Well, it's about $55,000 after taxes. Where did the $100,000 come from? Just random family gifts, and then we saved a lot. You've done well.

You've done very well. And you're 100% debt-free except your home. Correct. Your loan officer is giving you excellent advice. Absolutely. Okay, good. Let me walk you through a couple of things to watch for, okay? When a credit union or a local bank makes a loan like this, it's a loan they are going to keep at the bank.

They're not making it by underwriting guidelines of Fannie Mae or FHA. It's called a portfolio loan. They're going to keep it in their portfolio. Okay? So it's kind of like a home equity loan in a sense. They're going to keep it there. They're going to keep it there at the bank. Okay?

So as long as you know that, then what that tells you is that whatever rules they want to make up, they can do. So this idea that somehow they have to conform to some other guidelines is a bunch of crap. And so here's what you are going to make them do. What's this house worth? It's worth $325,000. Okay. So a $60,000 loan on a $325,000 house is what's known as a no freaking brainer.

Right. Unless you've got horrible credit or you're in bankruptcy, okay? Right. So what you are going to demand is three things. Okay. One is no closing costs of any kind under any circumstances. Okay. They need to do this to get this loan two is a fixed rate okay

and three is a fixed term do you want a 10 year or 15 year probably a 10 will be fine in this case but you do not get a traditional home equity loan where the rate floats and thereby the length of time that you're in the loan floats, and some of those even have balloons or calls after three years or five years. You don't want any of that. You want a 10-year loan that pays off in 10 years. That's called a fully amortizing loan at a set rate with no closing costs there is a local bank or credit union that will be happy to make you that loan

okay cool you're gonna have to push back though because they don't always use their brains at the bank you know that i do i'm a mom so i'm used to pushbacks. So I think I'll be okay. They're going to go, no, you need to get a home equity loan, and this is our home equity loan product. And I'm going, I don't care what your home equity loan product is. If you want this loan, it's going to be these three things. Okay, perfect. Well, thank you so much, Dave. Thank you so much, Anthony.

And you guys have a great day. You too. Great job by that loan officer telling him, that's a good loan officer telling him not to make a loan with him. Dave, I was shocked. That's good. That's good integrity. I like that.

Because it's a $60,000 home loan with a traditional mortgage is super expensive. Right. And the mortgage companies don't want to screw with it, and they're going to run the rate up, number one, if they do screw with it because it's so small. And they're probably going to hit you with a bunch of extra side fees that don't need to happen. So when you're making a small loan like that, under $75,000, especially where there's a bunch of equity, always go to your local credit union, always go to your local bank, and always remember those three things I told you. No closing costs, fixed rate, fully amortizing, fixed term.

I've seen some credit unions, Dave, do it below $100,000. Oh, they will. They'll do a loan. Yeah. They'll do a loan over $75,000. But when you get $75,000 and under, a traditional FHA or Fannie Mae loan becomes unwieldy. It's very expensive. Gotcha.

And most of the mortgage companies don't want to screw with that. Yeah, yeah. But the credit unions will, and the local bank will, especially in a situation like this. Very, very well done. Good. Good job with that loan officer. That's good stuff. This is The Ramsey Show. We'll see you next time. Thank you. Anthony O'Neill, Ramsey personality, is my co-host, number one best-selling author.

The phone number here at The Ramsey Show is 888-825-5225. Kevin is with us in San Diego. Hi, Kevin. How are you? Good, Dave. How are you? Better than I deserve. How can we help?

So anyways, I appreciate you guys for taking my call. A little back story. I just recently separated from the military. I did about 10 years. Currently, I'm a full-time student utilizing the military. I did about 10 years. Currently, I'm a full-time student utilizing the post 9-11 GI Bill. I also just recently took a government contracting position full-time in San Diego, which pays about $60,000 annually. My wife is a registered nurse, but we just had a baby back in January, so she's a stay-at-home mom for now. Anyways, my question is regarding equity in our mortgage. We owe about $300,000,

and our house is currently worth about $450,000. My wife and I are almost debt free. We've paid off almost $60,000 of debt. But my question is, would it be smart to take out about 20 or 30,000 in equity out of our mortgage to pay off the rest of the debt and possibly upgrade some things in the home? No. It wouldn't be. That's not a wise move at all. Again, you said the numbers.

I don't make sure you're hearing correctly. What's your household income right now? $60,000. $60,000 altogether. Okay, cool. And you said you have about $20,000 in debt? Yeah, about that. Yeah.

Yeah, I'm not touching the home loan. I'm not the home loan. I'm not touching the equity at all. What I'm doing is I'm trying to come up with a game plan and knock out this $20,000 cash. So, Kevin, thank you for your service. Your wife is at home with a new baby, and she's standing around inside that house looking and seeing everything that needs to be fixed. And that's what started this conversation. It did. I came home to a list of things like

I was afraid I read that right oh my gosh and so the answer is no babe when you are able to get back to work we'll be able to do this list of things after we've gotten out of debt and have our emergency fund in place. You cannot borrow your way into abundance. I understand. I do receive a housing allowance through the post-9-11 GI Bill. And you get that whether you do these repairs or not?

Yeah. So instead of taking out, would it be smart just to use that money? No, it would be smart to use that money to get out of debt, like every other piece of money you've got. Yeah. Because you're in baby step two and you're knocking the debt out. You've got a brand-new baby. We're trying to get out of debt.

How much is your housing allowance, Kevin? The housing allowance is about $3,000. But you get that no matter what? You can do with it what you want to do with it. Come on, man. So now we're at $78,000. That's what I'm saying. Household income, right?

Yeah. Now you're at a debt of... No, I'm sorry. $36,000. Did you say $3,000? $3,000 a month, right, Kevin? Yeah, $3,000 of housing allowance. Oh, I'm sorry. Now we're at $96,000 a month, right, Kevin? Yeah, $3,000 of housing allowance. Oh, I'm sorry.

Now we're at $96,000 household income. Now we're out of debt in five months. Yeah. And then you save up and do the repairs. What's the cost on the repairs going to be? Rough number is probably around $10,000. Okay. So here's the thing you have

a ninety six thousand dollar income you need thirty thousand dollars you should be done with both of these in one year without borrowing a dime okay okay so um now what we've got to do is walk through hit this what happens is uh the happens is very few people look at a situation like this and they're really doing a bunch of math and they're really thinking about how it's going to turn out 15 years from now. They're more thinking about the here and now. Yes. And that's what drives you to ask a question like,

do I borrow money to fix up a house while i'm still in debt and answer to all of it of course is no and the reason we answer the question we did is what helps kevin and his wife and new baby be in the best place 10 years from today not 10 days from today not 10 months from today, what is best for you and your family, what is going to put you in the most money situation, and that is to have avoided the debt and paid cash for the repairs and have paid off your existing debts. Yes.

And that's going to continue to free money up and continue to give you options and continue to do these things. And it's just a normal thing for her to be sitting at home. You know, she's dealing with a human that can't talk back to her all day and so um that is highly needy and uh and so it's it's in human nature to walk around and go well we need to paint that we need to fix that and didn't even notice it before come on now and that's just normal there's nothing wrong she didn't do anything wrong but that's shorter term thinking and we need to think what's best for this child long term 10 years 20 years out yes sir yes and if you put it through that paradigm

that's how anthony's quick answer as soon as you asked the question was no no with no explanation zero not a chance no all right elise is with us in Buffalo, New York. Hi, Elise. How are you? Better than I deserve. How are y'all? Just the same. How can I help?

Yes. So my question is, me and my husband are on Baby Step 2 right now, and we're looking to be finished in October, and then we'll do Baby Step three. And then we'll start interviewing some smart investor pros. And I've read like Chris Hogan's Retire Inspired and Everyday Millionaire, both awesome books. But one of the things I guess I'm thinking is kind of for us, like if we're about 25, and so we're wanting to like like, learn from our smart investor pro, but if we're the type of people who are like, we're not going to pull out, you know, our money from retirement. It's just going to sit there from, like, you know, 25 to 65 or 70.

Would we need to have a smart investor pro for, like, more than a year or two? If they're just going to be, like us i don't know like how to do investing then we'll be able to learn from them and kind of like take it from there yeah well you're not paying them a monthly fee anyway or even a flat fee per year to do your financial planning or something you're you're basically taking care of your financial planning needs the smart investor pros in your corner to help you make a purchase or you to do an investment if you needed to, if you needed to do a rollover because one of you changed jobs or something like that, or for advice.

And on a particular situation, something comes up and you go, hey, what about this? And so I, as an example, like you say, I'm kind of in the rhythm of steadily investing and I don't have some kind of big meeting with them uh every three weeks or something if i need something i call my guy and i say hey or i send him an email i say listen this is what i'm thinking got any ideas and he'll send me back a few ideas and maybe a few things to purchase that would do that and then we'll execute that purchase

or we won't um you know i do my backdoor roth iras i just finished them up the other day uh for this year and uh um you know so i have contact with them during that time but i don't sit and go over my statements with them every year uh they're not that complicated you know uh you can if you've got questions but the main thing a smart investor pro does is they're just they're there and available and in your corner. And you just need to kind of have these professionals at the tip of your fingers, at the end of an email or the end of a phone call, a text that can get back to you and give you an answer. That's good, Dave.

And you know what's so funny with my financial advisor? I told him I was trying to build my dream home in the next three years. And he's the one who told me, hey, instead of parking your money in a savings account, this was two years ago, he said start parking in a mutual fund. Then I heard you talk about it. So financial advisors are just good people to go to to get advice for any situation. Yeah, but it's not like you're paying a daycare to watch your kids or something or hiring a full-time governess for your children. This is more like someone that gives you parenting advice once a year. That kind of a thing. So you're thinking about it correctly.

You've got the right mindset about it, but they still need to be there available to you. We'll be right back. Thank you for joining us, America. Anthony O'Neill is our co-host today. Ramsey personality, number one best-selling author of the book Debt-Free Degree. You want to go to college and not have any debt? Oh, it can be done. You may not like all the choices. Some of them include hard work on your part. But he will show you exactly how to do that with a debt-free degree. Tony is in Dallas. Hi, Tony. Welcome to the Ramsey Show. Hi, good afternoon, Dave. Thank you very much

for taking my call. Sure. What's up? I do have a question regarding my mortgage and the situation I'm in. I'm just thinking about trying in the future if I should save up to refinance or just sell the home. Currently on baby step number two and expecting to hopefully pay that, be out of debt free by the end of this year. But right now we're on a pause because we're expecting the baby boy in the late May. Good for you. That's wonderful. Thank you. Thank you. Thank you. And so right now the only thing is our home. We have a 30 year term FHA loan with even down payment assistance. And so our payment is around $2,200 with income bringing in $5, I wasn't into your program or anything like that. A couple months later, that's when I started hearing you, and then I kind of made a, uh-oh situation. I realized, you know what, I got to live and learn.

So now I'm trying to just find the best way of going about this mortgage. Tony, is that $5,300 gross or net? That is gross. Oh, so you're bringing in about $4,400 net then? No, no, no, no, no, no. Sorry. Okay. And you said your, your house payment is how much again?

$2,200. $2,200. So it's close to that. I mean, 50% almost, but, um, we are expected an income increase, uh, in August. My, uh, my wife is going to complete her teacher certification. So we're going to see her income double. What other debt do you have right now, Tony? Just $14,000 of student loan.

So what is her income going to be then? What is your total household income going to be after she gets her certification? So after that, whenever she gets her teaching job, which i think we're hoping for august um thinking in around 6800 from 6500 to 800 just depending the area where she works okay all right so that puts you at about 30 percent yes so a little high and what do you do for a living uh and i work in insurance in insurance yes so uh how much do you project your income will go up over the next three years? Over the next three years, hopefully right now, which is a good time I was thinking about getting a part-time job.

But right now, since the storm hit in Texas, they may pull me aside to do overtime and help out in the claim section of our company. So that's where I kind of do it. What do you do in the insurance world? I'm actually a trainer. So I train people how to do claims. Oh, okay. So you're not selling insurance.

So your income is not following a sales pattern. Okay. So both of you are going to be getting plus or minus this overtime, normal cost of living plus or minus raises, right? Yes. Okay, so you're going to be at 30%, and, dude, you're going to have it tight for a couple years until it gets down to that 25% because your income continues to go up.

I don't think the house is going to kill you because her income is going to add to the thing right now. But the main point of the 25% is if you're going to be there for 10 years, yeah, you're going to struggle if your house payment is 50% of your take-home pay. But it's not going to be but for a matter of months. Yeah, I agree. Yeah, that's what I was thinking as well. I was just debating on that.

I was like, I know it's going to be tight. I told my wife it's going to be tight a little bit. And I get now with the 25% rule why it is. Yeah. So, you know. Because you're feeling the pinch in your budget right now. Oh, yeah. Yeah, for sure.

Let me ask you this question. When you have the baby, is she coming home or is she still going to work? Oh, she's still going to work. Well, the good thing right now is we kind of planned it this way. Okay. She's having the baby late May. Okay. So, she's going to have the whole summer off. Okay.

With the baby. And then I do, I get like six weeks paid time off, so I'm going to take the first, probably the whole month of August off while she goes back to work when the new school year comes in. Oh, that's good. So the point is it's not a forever thing, it's for

a for now thing. And the other point is for our listeners, we would not have signed you up for this trip, but you're going to be okay taking it. Okay. Does that make sense? Makes sense. Yeah. Hey, man, thanks for the call.

Open phones at 888-825-5225. Nathan's in Houston. Hi, Nathan. How can we help? Hey, Dave and Anthony. Thank you for taking my call. Sure. I have a question about when it's okay and how much to possibly spend on upgrading my wife's wedding ring. I've heard you talk about upgrading vehicles, which are a little bit more practical.

And depending on who you ask, this might be practical. But so my wife and i are going to celebrate 15 years coming in april and uh we're we're four baby set four five and six okay um and how much would you spend on the upgrade that that's kind of what i was wondering, I was thinking maybe in the $20,000 to $25,000 range. What's your income? But like $325,000 on average. And you're going to pay cash for the upgrade? Oh, for sure.

Yeah, that's fine. That's fine. I guess I didn't know when. Okay. Let's just pose it another way, okay? You remember when they used to have these things called cruises? Right. Yeah.

Back before the pandemic. I mean, let's say that for 15 years you wanted to spend $25,000 cash and go on a cruise, a luxury, luxury, luxury around the world cruise or something. And that was the way you were going to celebrate the 15th. And you had the cash, and you make $325,000 in your own baby step four i would say do that okay yeah in other words if you consumed the money and got nothing to show for it but a memory which is what travel is right right and then i would still say okay because you have the money as a ratio of your income so this is a consumption now what you don't want to do is call me up and tell me how diamonds are a good investment because that's a bunch of crap no i

i hear you talk about that often it was just it was one of those things that i'm having trouble with the with the amount yeah well i was well if it was something else though my point is it's a ratio you can afford yeah okay if you said if you told me that number and then you told me you make $80,000, I would be going, ah, that's a lot. Yeah. Sure. No, I understand that. Yeah. No, when we got married, it was totally different.

Yeah. Well, me too, dude. Sharon's got a bad gum headlight on her finger, but she started out with a.23. You can't even see the little speck she started with. Not a headlight, Dave. I like that. Yeah, my wife's rolling a very similar rate. Yeah.

Okay, well, thank you. I appreciate it. You've done well, sir. Congratulations. And the whole idea that you're actually asking yourself the question, not us, but you're asking, you're gauging it against something. And, Anthony, I think it's real important. You've worked with lots of wealthy people and so have I.

Yeah. That it's all about a ratio. Yes. Yeah. And does it, you know, if you just put that amount of money in the middle of the table and burned it with a match, does it ruin your life? Does it affect your life substantially? Well, that's the question to ask. And if it doesn't, then

it's an okay consumption ratio. If it does, then you don't do it. Absolutely. And with that, I mean, he's been married for 15 years. I'm pretty sure his wife, she's worth that investment. She earned it. She put up with him. I didn't want to say she deserves it because I don't want her to be like,

I deserve it. She put up with him. That's why Sharon gets whatever Sharon wants. I was about to say she deserves it because I don't want her to be like, I deserve it. She put up with him. That's why Sharon gets whatever Sharon wants. I was about to say the same thing. If my wife can take and deal with me for 15 years, I'm dropping it. She deserves a lot. Yes. I mean, a lot.

Whoa, whoa, whoa, Dave. Whoa, whoa, whoa. Calm down. We just got to get you started. We got to get you started, though. Whoa, whoa, whoa, Dave. I'm working on that, man. I'm working on that.

Oh, my gosh yeah i mean it's uh the but the thing is it is it's always a good thing to give you pause and think about what you're going to consume yes giving you don't have to think quite as much about because you can't really mess generosity up you want to be wise with it. Yes. But, you know, investing. How much can you invest too much? Yeah. No. You really can't, you know. But you don't have to think about the amount as much. But when you're consuming it, using it for personal gain, personal enjoyment, then you have to need to think about it.

And that's a good spiritual exercise. Very well done. Very well done. That puts this hour of The Ramsey Show in the books. Hey guys, this is Kelly, associate producer for The Ramsey Show. Did you know that over 16 million people listen to The Ramsey Show every week? And a lot of those people listen on one of our 600 plus radio stations across the country. To find a

station near you, head to DaveRamsey.com slash show.