The Ramsey Show - App - Should I Have a Bigger Emergency Fund for My Dogs? (Hour 1)

Episode Date: October 19, 2021

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Thank you. Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental 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, host of the Fine Friends and Entree Leadership Podcast, and I am flying solo today. I am totally free, all by myself. I would sing it, but the FCC would take us off the air. It's a free call today, and I would love to hear your questions. The phone number is 888-825-5225. Again, that's 888-825-5225.

And yes, I am one of the storied millennials out there. And here's the thing about millennials that they don't tell you. They're scared of phone calls. But to make this show interesting, we've got to hear your voice. So give us a call if you're a millennial, especially Gen Zers, Gen Xers, Boomers. I'll take them all. But I am one of those millennials and I was very average. When I started here at Ramsey eight years ago, I had $40,000 in debt and I had the exact average amount of student loan debt. 36,000 of that was

student loans and 4,000 of that was credit cards. And I grew up in a very normal household, middle class. I grew up with immigrant parents who immigrated from the Middle East, and they conformed to the American culture real fast. And the American dream, here's what it is. I want to buy a house. I want to have a good job. I want to have the car. And with all of that comes payments. And so I learned that you just live on payments, and you just got to be smart about moving the debt around and managing your debt, and that is the way to financial success. Wrong. When I started here at 24 years old as an intern, I started following the Ramsey Plan.

I went, oh my gosh, there's a different way? I don't have to live with these student loans for the next 20 years, which is the average it takes for people to pay them off? I don't have to be average anymore? And so I got on the plan. I started following these baby steps that we teach day in and day out. And I started realizing my plan sucks,

so why not try someone else's? And I did it. In 18 months, I paid off my debt. I was debt-free, and I built that emergency fund, and I started investing for the future in our company, 401K, here. And I don't have kids yet yet but i met my wife here she works here at ramsey solutions it's a beautiful story for another time

and now we have this big hairy audacious goal of paying off our house in our early 30s and i'm happy and proud to say that within a few short months we're going to have that bad boy paid off and i'm not rich i I'm not special. I never thought any of this was possible for me. But after following this plan and realizing that it doesn't take a genius, it just takes sacrifice. It takes hard work. It takes saying no to a lot of things you want to do in order to get things that you don't have. And I don't want a payment the rest of my life. We've got goals. We've got things we want to do, vacations we want to take, organizations we want to give to,

and I realize that money problems and payments were just holding me back, and it's holding back an entire generation of people who aren't starting families. They're not buying the house that they want. They're not able to do the things they want to do. They're in jobs they don't even like because they're trying to make their payments.

So I want to talk to you guys today. 888-825-5225 is the phone number. Call us up if you want to learn how to pay off debt, if you want to know what to do with the emergency fund, what's the best way to pay off the debt, how do you get started in investing, how do you pay off your house early. I would love to talk all things money with you today and we are kicking it off with David in Phoenix, Arizona. David, welcome to The Ramsey Show. Yes, good morning. Good morning. Well, good afternoon here. I don't know where you are. What time is it in Phoenix? It's 1110. Okay, you're right. We're both right. How can I help today? So my question is what to do with my excess cash that I have in my possession. Okay.

So far we have seven houses and all paid for. Whoa. And we also have five of them are rentals, and we're gathering up about $5,500 a month. Incredible. What's your net worth? Probably just under 300 or 3 million. Unbelievable. Way to go, man. You're a Baby Steps millionaire. This is absolutely incredible. Yeah. Well, also I have two houses that are ours, one here in Phoenix and one up in Idaho. And they're about a million, and they're paid for also. Oh, my gosh.

So we took some money and got $28,000 in gold, and then we got $13,000 in silver. And we're looking at purchasing some more, but i don't know what to do with it we got about three hundred thousand that we could play with there so you have three hundred thousand liquid dollars to play with are you saying if you sold this uh gold and silver no no we got three hundred thousand just sitting here in cash Well, do you love real estate? Well, it's there in the bank. Yeah, yeah, we've been doing well in it. It sounds like that's something that you guys are really into.

I mean, you're obviously at Baby Step 7, so this is where you build wealth and give, and you've got tons of options. And so I can't make that decision for you, but what I can do is dig in and ask you, what are those maybe short-term, long-term goals? Are you married? Do you have anyone else in the family that is making this decision with you? Yes, I am married. We've got five children, and they're all giving us grandbabies. Oh, that's sweet. So what's the goal?

Do you want more real estate, or do you want to do something fun? Do you want to take maybe the kids and the grandbabies on an amazing vacation and put part of this into real estate? What are you thinking? Well, we're totally debt-free. Cars, all that stuff is debt-free. So we gather up $5,500 a month and we can easily live on that, plus put savings away. So your question or my question is, I got $300,000 and we're at $30,000 and we're looking at maybe investing that not necessarily in more real estate because I'm 68 and we do our own rental. We clean up and screen our tenants. So far, we've got good tenants, and they're paying without any problem.

And, I don't know, we've got this $300,000. Should we buy more gold or silver? If I'm you, I'm not doing that. We don't recommend getting into gold and silver. I'd rather see that in good growth stock mutual funds. You can do that in a brokerage account if you want to keep it fairly liquid, and it's going to be in there for four, five, six years. But if I'm you, I'm sitting down with my wife, and I'm going, hey, what could we do that's absolutely incredible? Because this is the part where you get to live like no one else because you guys have lived like no one else.

So have that conversation. Start dreaming it. Maybe it goes to four places. Maybe you go, hey, we're going to take a crazy vacation with all the kids and grandkids. We're going to do some real estate investing. We're going to do some mutual fund investing, and we're going to get a few toys, and we're going to give generously and split it up. It doesn't all have to go to one thing. But I think this is a conversation that you and your wife have.

You've done so well. There's no wrong answer here other than going into debt. But I think based on your goals and the things that you want to do and how you want to leave a legacy, this is where you get to do that, man. You're an inspiration. David, you have done so well. $3 million net worth, $300,000 sitting in cash. You're who I want to be when I grow up, David. Thanks for calling in. This is The Ramsey Show. You know, I heard a sad and touching story recently.

Zander Insurance has set up a scholarship for children whose parents died without life insurance. Last year, they gave away over $165,000 to help kids avoid debt and go to college to pursue their dreams. It's touching, but also sad since it's a situation that occurs all over the country and can be avoided in so many cases. This is the reason why I talk about Zander and term life insurance every day. It's not expensive or complicated, and it's gotten even easier with many companies no longer requiring medical exams. Zander shops and compares all the top term life plans and stays with you the whole time to make sure your family is taken care of. That's why I've used and recommended them for over 20 years.

Go to Zander.com or call 800-356-4282. So I don't have to keep talking about these sad stories. We'll be right back. any questions, I would love to have a conversation. Danielle joins us in Chattanooga, Tennessee. Danielle, welcome to The Ramsey Show. Hey. Hey. All right. So my husband and I work for the same company. And in January, they're finally going to be offering a 401k program. We're at the point in our baby steps that we can go ahead and start investing in that. What I was wondering, though, would it make more sense for us to put them, basically have one account versus each investing in an account just because of the way the interest works, or would it make more sense for each of us to have our own account? So we're doing a 5% match on it.

What was your thinking in doing it all in one account? I wasn't sure if the interest would compound better because of having more in one account versus having it split up into two accounts. Ah. No, the interest won't make a difference. If you've got 10 in one and 10 in another or 20 all in one, it's still going to compound at the same rate when you put it all together in the end. So on that side, there's not going to be any benefit there. So if that was the only reason you were thinking about doing it in one,

I would go ahead and do both. You're going to get the match on both sides, and you'll have two accounts. How old are you two? I'm 24, and my husband's 29. That's so awesome. You guys are already jumping into this thing. What are the options as far as the 401K goes? I know there's a 5% match. Is this traditional, or is there a Roth option as well?

I think it's just traditional. He's still kind of ironing out the details. Really, we were the ones that brought it to him and said, look, we kind of need to either move on or start seeing if there's some options here because there's kind of too many places that are offering it right now to stick with something that's not. And so they started working on it a couple months ago and said that by January they're hoping to have it all set up to get us going in it.

That's great. So this thing will kick off in January? Yes, it should kick off in January. And you've got your fully funded emergency fund in place? Yes. Yep, and all debt paid off. Way to go. Yeah, if I'm in your shoes, here's what we recommend.

A match is going to beat Roth, which is going to beat traditional. So I would go up to that 5% match for both of you out of your paychecks. And once you hit that, I would go, if you don't already have a Roth IRA, go ahead and open one of those. You can get in touch with one of our smart investor pros at RamseySolutions.com. They can walk you through that process, educate you on your options, and that's going to grow tax-free with after-tax dollars. And so you can put up to $6,000 for people your age. You can put up to $6,000 this year. And once you've done the match at 5%, you've got the $6,000 fully funded Roth IRAs for both of you, then you can go back to that company 401k and finish out your 15%. Okay. That was what I was going to ask was if we should put those.

Okay. Yep. If they end up having a Roth option, you could put that all in the Roth option. The key here is we want that tax-free growth to be working on our behalf. And you guys are so young, you're going to be multimillionaires. I'm just so pumped hearing young people getting into investing and doing it the right way. Debt-free with an emergency fund. Well, thank you. Absolutely. Thank you so much for the call. Good stuff there. Marshall is in Boise, Idaho. Marshall, welcome to The Ramsey Show. Hi. Thanks for taking my call. How are you? I'm doing wonderful. How can I help today?

Good. I'm not quite as young as your last caller. I'm 44. Okay. Hey, that's still young, man. Give yourself some credit. Okay. Thanks. I'll try to remember that. Just moved here from Virginia and I kept my house in Virginia that I'm renting out. And then I'm renting an apartment in Boise, in the Boise area. And I'm trying to decide whether it's smart to hold on to my house in Virginia or not. I'm single, one small dog. You're single and a dog, and you're renting right now. Are you wanting to own a home in the Boise area?

Are you there long term? Don't know yet. But you're working in Boise currently. I am. And it's not remote. You're going into the office and all that? You've got some roots there? I'm going in to teach children math, and I don't know how long I'll be here, but at least for the next year.

Okay. Well, you know, I don't love the idea of being a long-distance landlord. I'm sure you've got to have something set up to where, you know, if the HVAC goes out, you've got someone to call, right? Yes. I have a company who takes about 80 bucks a month to kind of manage things. Okay. Yeah. Long-term, I want to see you with a primary residence paid off and then getting into real estate investing. So if I'm in your shoes, personally, what I would do is sell that house, take that money. And if you think you're going to plant roots in Boiseise at least for a few years, you can go ahead and find something in the Boise area

and work aggressively to pay that off. Do you have any debt currently? I've got about $8,000 in student loan debt, and I've got about $25,000 in the bank for my emergency fund. Oh, okay, you have $25,000 in cash in the bank. I thought you meant you had debt. I was like, you have debt in the bank? How does that work? No, no, no. So we've you have $25,000 in cash in the bank. I thought you meant you had debt. I was like, you have debt in the bank? How does that work?

No, no, no. So we've got the $8,000 in student loans, and then do you owe anything on that property? I owe $110,000, and I could sell it tomorrow for probably $220,000. Oh. Well, that's a nice chunk of change. So you'll have about $100,000 if you sell it in cash?

Yep. Well, I want to sell it in cash? Yep. Well, I want to see these student loans paid off. I mean, it's not a ton here. You could get rid of it without having to sell the home. So there's no urgency there. But if I'm you, I'm selling that house, taking a portion of that money, getting rid of these student loans. You've already got that emergency fund. I would even take down that emergency fund and get rid of these student loans today, regardless of the home sale. Okay. What's making you have... That makes me home sale. What's making you nervous about it? I just like having that money in the bank in case of an emergency.

Do you like paying your student loan payment? I do not. Well, I guess you've got to decide. Well, I haven't had to pay it in a while, but yeah, I mean, it's the next thing to go. I just wanted to maybe get up to maybe around 30 grand at the bank before I paid that off. Well, you'll still be in a great financial spot. Even paying off this loan, you'll still have, what, 17 grand or so? 16 grand? So you're still going to be in a great spot for an emergency fund sake. I'm sure that's still at least a few months worth of expenses. But without that payment, you're going to have

a little bit of income back in your life to put towards your next goal, which I assume would be, are you investing currently? I contribute to a 401k at work and have been contributing to a 403b at my last job for about 18 years. Okay, nice. So, I mean, you're doing some good things. It's slightly out of order from what we teach, where I want you to pay off that debt first. You have the cash on hand. You can do that today, and then you can continue investing once you build that emergency fund back up to where you want it, three to six-month range. I assume since you're single, you want it closer to six months? Yes. Okay.

What were you saying? You think get rid of that house. I would personally because you don't have a primary residence that's paid off. If you had a primary residence that's paid off and this thing was still lingering and it didn't bother you that much, but it's still a long-distance situation and you don't have a house that you're living in. And so I want to see you debt-free completely, house and everything, before you get into real estate investing. So there's nothing on fire here, but if I'm in your shoes, you're going to put yourself in a really sweet financial position when you have six figures in cash and now you have some options when you want to go put 20% down on a place in Boise or wherever you end up planting your roots.

Okay. Well, that helps and I appreciate your time. Absolutely, Marshall. Thanks so much for the call. Love this real estate talk. There's a lot of hype going on in the real estate market today, particularly buyers out there think they've got to buy and it's got to happen right now. And a lot of that is because mortgage interest rates keep reaching all-time lows, making buyers frantic to lock in. And don't get me wrong, getting a low rate is a great thing, but it's not a green light to do stupid. Stupid as in buying before you're debt-free or with a zero down payment, or offering way over asking price and waiving inspection. Stuff like that is high

risk and always costs you more than you'd save in the long run. So get your head out of the craziness for a second and look at your situation. Are you debt free? Do you have a down payment of 10 to 20% saved? Can you afford home ownership? Do you want the responsibility? If and only if your answer is a big fat yes to all of those questions, then buying a home is a smart move for you. Now, it's easy to get caught up in all this home buying hype, which is why you need FACTS. We've got a great free mortgage calculator to figure out exactly what you can actually afford with the mortgage options out there. Just go to RamseySolutions.com and click on free tools to check out that free mortgage calculator. Do things the smart way.

This is The Ramsey personality, host of the Fine Print and Entree Leadership podcast, both great podcasts you can find on the Ramsey Network. You're listening to The Ramsey Show. It's a free call this hour, 888-825-5225. I would be happy and honored to answer your money questions. Joey joins us in Fort Myers, Florida. Joey, welcome to The Ramsey Show. Thank you. Thank you. So I have a question. So I am all cut off on this stuff. I do have a car payment for the next two months, 0% interest, no issues. It's like $1,000. But I do have $120,000 in the bank right now. I have a potential

additional $120,000 to $130,000 in the bank if I need it. And I'm currently in an apartment for the next four months. And I'm trying to figure out what should I do. I want to invest in real estate potentially. It sounds great on Facebook, a lot of benefits, but I still need to become more educated around it. But I was thinking of instead of buying a single family home, buying a duplex or a quadplex, but really I'm kind of just in the ether at this point with all the options, but no options at the same time because I'm not that educated on it. So I'd love some advice. How old are you? I am 33. 33, about my age. All right. And what's your income? It's $105,000 a year.

Fantastic. And tell me this, where is all this money coming from that you've got in the bank? Have you just been saving for a few years now? Yeah, I have a pretty good job, obviously, in just been saving and being a little frugal. So yeah. Very impressive. And you said you have potentially another 120 in the bank. What does that mean? So I, so I had a, I flipped the house and had an addition, made a hundred thousand off of it. And I gave it to my mom cause she helped me buy the house. But she's demanding that I take it back, but I want it to be hers because it's kind of my payback for her. So if I need it, I have it. So you gifted this thing to her and she's like, no, take this back. I don't want it? Basically, yeah. Interesting. Well, that's nice of you. So you're not

brand new to this real estate game since you flipped a house. Well, here's the thing. You mentioned at the beginning that you have this car loan, and you mentioned that it's 0%, so you're not worried about it. What is this car loan? How much? It's only $800, $800 to $900, and I could pay it off tomorrow. You owe $900 total on this car debt. Yeah, yeah.

And you have $120,000 in the bank. Correct. Is this sentimental? Why don't you just pay the car off today? I just, if it's 0% of 0%. I don't care if it's 100%. This is stupid to carry around a debt when you have $120,000. It's a math equation.

Yeah, yeah. I see that. Do you have any other payments in your life? Is this your only debt you have? That's it, yep, other than my rent payment, I see that. Do you have any other payments in your life? Is this your only debt you have? That's it, yep, other than my rent payment, yep. Wow. I mean, you've done really well, man. I don't know what's making you hang on to payments,

but I think you need to say no to payments for the rest of your life and become extra wealthy. I mean, you're doing so great otherwise. Yeah, so what should I get into to potentially grow that money? Should it be in rental properties? What are your thoughts on that? Clearly, that's something you're passionate about. And so what I want you to do is once you pay off the car today, which you're going to do as soon as we're off the phone, get rid of that debt. And then I want you to park some of that money for a fully funded emergency fund.

You already have it in cash, so figure out what one month's expenses looks like for you. And are you single? I am. Okay. I would probably lean towards that six months since you already have it in cash. So take one month's of actual expenses, not income, multiply that out by six, and leave that in maybe a high-yield savings account and park it there for emergencies. Okay. Then whatever money is left after that, are you currently investing into retirement?

I am, yes. Okay. I'm going to let you continue doing that because this is all going to be solved in a matter of hours. So I'm not going to tell you to pause investing because you're about to pay this car off. You already have the money for your emergency fund. So are you investing 15% into something like a 401k at work? I am not actually. What are you investing in? Well, I'm doing 401k, but not 15%. I've seen the returns and then kind of some of my side hustles,

I was deciding to spend that money on some of the side hustles, which, yeah. Okay. Well, here's what I recommend, what we teach, is to do 15%, and you can do it if you've got a match at work, do it up to the match, and then you can open up a Roth IRA and fill that up. The max is $6,000 for you, and then go back to the 401k and keep filling that out if you don't up a Roth IRA and fill that up. The max is $6,000 for you and then go back to the 401k and keep filling that out if you don't have a Roth option. Once you do 15%, then you're on to baby steps five and six,

which is saving for kids. College, do you have kids? I do not. No kids. So you're moving on to paying off your house early, which you've got a property already that's paid for. No, I'm literally renting in an apartment. But the one your mom is in.

Oh, yeah, we've paid that off. Okay. So I think your next goal is to find a primary residence for you to live in and pay that off. I wouldn't go getting into real estate investing quite yet. Okay. So you're in the Fort Myers area. I would start looking at what houses cost over there if that's where you're planting Okay. If you can put 20% down and avoid PMI, that private mortgage insurance, that's going to avoid you throwing money away to protect the banks. And so once you do that and you pay off your house early, then we can start talking about real estate investing as you live and give like no one else in Baby Step 7.

So that's where that would fall. I'm all for real estate investing. I think it's fantastic. I think you're going to do really well with it. But there's a time and a place for it, and you're real close, but you've got a few things to do before that. Okay. Absolutely. Perfect. I appreciate it.

Yeah, man. Way to go. Love hearing stories like that, Joey. Pay that car off, buddy. All right. Amber joins us in Little Rock, Arkansas. Amber, welcome to The Ramsey Show. Hey, George. I'm so excited to talk to you. Well, it's nice that someone's excited to talk to me for once. It's great to talk to you, Amber. How can I help?

We are in Baby Step 2. Okay. And I just have a question about our emergency fund and how we're doing on it. I have four children and four small dogs. Wow. Busy. Yes, very busy. A lot of creatures, a lot of drool. And our dogs are, you know, like our children to us.

You know, they sleep in bed with us. They're our babies as well. I'm not comfortable having only a $1,000 emergency fund in case they need to go to the vet if there's an emergency. So you're more concerned about the dogs than the kids? Yeah. What if a kid breaks a leg? Amber, this is a hilarious scenario here.

You're more concerned about the dog vet bill than you are the kids' medical bills. Well, luckily, we have very good insurance. Okay. So I hardly pay anything. They have two different coverages. Okay, okay. This makes a lot more sense. For them, that's completely free if any children need to go to the doctor. I don't pay anything, but I do pay, like one of my dogs hurt their leg, and I had to pay $4,000 to get it fixed. Oh my gosh. It just makes me nervous only having $1,000.

I understand. So how much debt do you have? Total of $30,000. Okay, and what's the household income? My husband makes $6,000, and then I get... A month? Yes. Okay, that's comfortable.

I get $2,000 child support and also $800 of a retirement, so like $8,800 total. Okay, and that's take-home? Yes. So we can get rid of this debt within a matter of months and get you a lot more security with a fully funded emergency fund. Yeah, we have about $3,000 a month we can put towards the debt. Okay, so that's 10 months. I think you can do it faster than that.

I think you can live on less than that. And here's the deal. I get that $1,000 is scary, but I want you to be scared because debt is scary. It's stealing from your paycheck. It's stealing from your life. And so you've got to make a decision to go, I want to take this uncomfortability and let it fuel me in my baby step two journey as I pay off my debt using the debt snowball from smallest to largest, regardless of interest rate. And in no time, you're going to build that fully funded emergency fund. But right now you've got to let this fuel you on your

journey to debt freedom. This is The Ramsey personality, host of the Fine Print and Entree Leadership Podcast on the Ramsey Network. And it's a free call this hour, 888-825-5225. If you need some advice, you want some affirmation, you want a second opinion, I am here for you today. Today is the day you can actually get on the show. Don't be scared. Don't be shy, especially you millennials, you Gen Zers who think your phones are just for TikToks. No, they make phone calls too. There's a special app for it. And if you just type in the numbers, 888-825-5225, you'll get connected with Kelly and she will be mostly happy to talk with you. And hopefully we can get you on the air and get you some help. That is what I'm here for. We just took a call from Amber and it was hilarious. She's got four kids and four

dogs and she was more concerned about the dogs. Understandably so, because the kids have health insurance, but she was worried about the $1,000 emergency fund. And it reminded me of this hilarious article I found from Yahoo Life. Survey says nearly half of millennials and Gen Zers spend money on their pets' social media. This is wild. New survey from LendingTree. More than one quarter of the 1,425 pet owners polled. So 1,400 pet owners were polled. 28% said they've spent money on their pets for social media posts. Oh my gosh. About 47% of Gen Zers admitted to the practice, along with 40% of millennials. And here's the wild part. When you dig into the numbers, the Gen Zers say they spent the most,

an average of $1,800 per month on their dogs. A mix of essentials, subscription boxes, pet insurance, and the expenses required for social media fame. Y'all, if there was a wall, I would try to punch through it right now. I don't know that I'd even make it through the drywall. But this is insane! What are we doing now? Unless your dog makes you money.

Like I'm a big fan of Doug the pug and Doug the pug is a multimillionaire and I am not. So Doug the pug is doing something right. But if you're aspiring to get a pet sponsorship and all these things, but you're spending almost two grand a month to make this happen. This is insane. And then you're telling me that the housing market's too expensive. Yeah, it is when you're spending two grand a month on your dog. Goodness gracious, how cute is your Pomeranian? I have an adorable French bulldog. And yes, she does have an Instagram, but we rarely post. We just did it to stop bothering people on our own personal social media feeds. And no, we don't spend anywhere near two grand a month on our French Bulldog, as expensive as they are. Kelly is looking at me with a lot of judgment right now, and I am here for it. I am loving it.

So there you go. That's some news from Yahoo Life. Thank you for that amazing survey from LendingTree. Let's go to the phones. We've got Heather in Dallas, Texas. Heather, welcome to The Ramsey Show. I'm so glad to talk to you. Thank you for taking my call. Absolutely. How can I help today? So my question is, I discovered Joel about a year and a half ago, well, not quite, right after I bought a new home. So I bought a home about 14 months ago and then discovered Joel. And I'm thinking I may be a little house poor and I'm wondering if I should sell and if so with what sense of urgency in the current market. Okay all right walk me through the situation. So what's your household income? It's right at 95 gross. All right and is

that just you? Is there other people involved here? Just me. Fantastic. Okay. What was this house purchase? How much? So I bought it for $340,000. I put $80,000 down, so I financed $260,000. Okay. Unfortunately, for 30 years at 3%. And I owe about $256,000 now. I talked to my realtor recently, and he said he could probably sell it for $435,000. Whoa.

I know. Thank you, pandemic. I guess it's the one. It's a nice, decent thing. Yeah, that's impressive. So I love the home. It's everything I would want, but I'm just wondering if I should sell. Well, I don't want you to think you're in a fire now.

What percentage of your take-home pay is the mortgage payment? I'm thinking, if I did my math correctly, it's about 31%. Okay. I mean, we recommend 25% of your take-home pay on a 15-year fix. So obviously, you went with a 30-year that lowers your payment, and so it is a little bit high. Do you think your income is going to increase in the near future? Not by much. Probably like 3% per year is my guess.

2% to 3% average. Okay. I'm debt free. So you don't have any debt other than the house. Right. And you have a fully funded emergency fund. I have a fully funded three months. Since I'm single, I am shooting to the six months, but I have three months so far.

Okay. Other than that, I'm like on step six, I believe. Yeah. Well, Heather, based on the numbers here, you're not in terrible financial shape. I mean, is the payment stressing you out? Is it putting a big crunch on the budget? No, I'm just totally getting on board with y'all. I just want to do the right thing.

So you went, oh, my gosh, this Ramsey plan, I didn't do it the right way. Oh, my gosh, no. And I do like to have a little bit just cash flow. I wouldn't mind having more just to be more generous or whatever the case may be. But I just didn't know what sense of urgency I should feel right now. No, I mean, nothing's on fire. If you called and said, hey, it's 50% or more of my take-home pay and I'm just riddled with anxiety and I don't sleep at night and I can't do anything with my life because of this mortgage payment, I would say, yes, sell it. But you told me this is basically your dream house.

You love it. You're in this location for a while. I wouldn't go selling it today. Now, if there was any other reason to sell down the line, I would say, okay, go for it. But if you have no reason to sell other than you think you're underwater in this thing, you're not based on the numbers. Okay, good. And hopefully the market, it won't decrease in value anytime soon.

No, I think it will cool down eventually. I don't think you're going to lose $100,000 on this deal. It may not be $435,000 forever, but maybe in five years it is back to $435,000 and you still live there. So I would still be aggressively paying this thing down. And later down the road, if I'm you, I'm going to refinance and you can do the math to see when the break-even point would be on that. But I would refinance eventually to a 15, or you can just pay it down. I mean, it's at 3%. You've got a pretty low interest rate there. So treat this thing like a 10, 15-year mortgage and get this thing out of your life so that you can move on to bigger and better goals.

Well, thank you. That puts my mind at ease a little bit. That's what I'm here for. I love to hear it. That's so great, Heather. Thank you so much for the call. Good to talk with you. We've got Mitch in Pueblo, Colorado.

Mitch, welcome to The Ramsey Show. Hi. Good afternoon. Good afternoon. How can I help? Hey, so I've got a situation where I have an opportunity to purchase half of what my brother owns on a property we're in on together. Okay.

And use it as a rental property. Okay. Okay. He wants to sell and he wants his half so he can invest in something else. I'm thinking more long-term and want to leave something for the kids, you know, further on down the line. Problem is, is I don't have cash to buy him out. So I would need to, yeah, I would need to borrow 70, well, 65 grand. Do you have a mortgage currently?

Yes, we do. Oh, boy. Well, this puts you in a bit of a pickle here. So what happens if you don't have the cash? What happens with your half? Well, I'm going to try to convince him for both of us to use it as a rental. Okay. For now.

But he's saying he wants to get rid of it. He wants to sell it and take the money, take his half. Yes, he wants his half. Correct. So I have to try to convince him to use it as a rental until I can come up with half of what the property is valued at, so I can purchase his half. I mean, it's basically you're wanting to get into real estate investing right now, but you don't really have the cash flow to do so. That is absolutely right. Do you have any debt other than your personal mortgage?

No, none whatsoever. What's your mortgage? What's left on it? $105,000. And what's your mortgage? What's left on it? $105,000. And what's your household income? At this moment in time, it's a little less than $70,000. $70,000. So it's not much. Yeah.

Well, what I would do if I'm in your shoes, I'm trying to pay off this mortgage before I jump into real estate investing, and that might be a conversation. I mean, it's family, so it could get dicey, but hopefully he'll be willing to work with you and go, hey, can we rent this thing out for three years? Let me try to get this house paid off and work up this cash. And over time, maybe you guys can work out a deal. But I do not like the idea of you borrowing money while you still have a mortgage, getting into this thing, having this anxiety in your life, and trying to pay both of these mortgages, essentially, with the hopes of cashing out a little bit or making some rental income. So, no, I don't like the idea of you borrowing money. I think it's going to be a hard conversation with your brother to figure the situation out. But please, for the love of God, don't borrow money when you still have got a mortgage, man.

That puts this hour of The Ramsey Show in the books. My thanks to Ben Hill, our producer, Kelly Daniel, associate producer and phone screener, and you, America, for tuning in and calling in. 888-825-5225 is the number. We'll be back with you before you know it. This is The Ramsey Show. Have a friend or family member that needs a daily dose of Ramsey advice in their life? Let them know about the Ramsey Call of the Day podcast. It's a quick hit of advice about life and money in under 10 minutes.

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