The Ramsey Show - App - Should I Invest in a Vacation Home? (Hour 3)

Episode Date: July 28, 2023

Ken Coleman & George Kamel answer your questions and discuss:  "Should we use my husband's severance to pay off our house?" "Should I invest in a vacation home?" "Is it wise to live with my mom until I have a down payment?" "Should I pause investing to pay down our house?" "I did the baby steps backwards" Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Here's an EveryDollar deal just for our listeners: get a 14-day free trial PLUS $15 off your first year of premium. Click the link below and start budgeting today! www.everydollar.com/george Want a plan for your money? Find out where to start: https://bit.ly/3cEP4n6 Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 Interested in advertising on The Ramsey Show? https://ter.li/s64ye3 Ramsey Solutions Privacy Policy

Девочка-пай Live from the headquarters of Ramsey Solutions, broadcasting from the Pods Moving and Storage Studio, this is The Ramsey Show, where we help you win with your money, your work, and your relationships. The phone number is 888-825-5225. 888-825-5225. I'm Ken Coleman. George Campbell joins me this hour, and we are here for you taking your money questions and your long-term, short-term work and professional questions because that affects your income. They all go together. I'll be here to help you with those questions. And George has got you covered on the money stuff. And here we go. Let's get going. Chris is joining us now in Denver, Colorado. Chris, how can we help?

Hi, thank you for taking my call. I am calling to ask about paying off our house. We are on baby step four, five, and six, and my husband just lost his job about three weeks ago. Oh no. What happened? That is a really good question. He was a paramedic for 28 years and this came out of the blue. So we're still trying to figure it all out. Any severance at all? A small amount. Yes. Which would give us what that's going to cover. Is that any portion of his income? They said it's three months. He did a lot of overtime, so it doesn't, they say three months, but it's not really what he would make in three months because he worked a lot of overtime. Okay. So. Okay. And are you working outside the home?

Yes, I am a teacher. Okay. And so what is the current household income? I make about $50,000. All right. Is that enough to get you guys by? Well, that's my question. We will not be able to pay all of it just on my income with our house payment and all the bills. I've already paused all of our retirement withdrawals and all that. So we have that small settlement, and then we also have our emergency fund. But we are in the middle of a remodel project on our house. Our son is going to college in about two weeks, and our daughter is getting married in October. Oh my. This is the perfect storm,

isn't it, Chris? It is. It really is. Yeah. So I'm just trying to figure out what's going to be the best for us to do. The remodel is about 75% done, but we are planning on cash flowing the rest of it as well as what we have left on the wedding. My son has done awesome and he's got scholarships and he is prepared to hopefully pay what he will need at least for this year. So my question is, do we use the emergency fund that we have and what we're getting from the company and do we pay off the house? Because we could, it would be really tight, but I think we can pay off the house and then my income would be able to meet our bills. What's left on the mortgage? I'm sorry? What's left on the mortgage? About $56,000. Okay. And how much money do you think you guys would have a pile of cash

once all is said and done? It honestly depends on, we haven't received the money from the company. So it depends on how much comes out in taxes. It's going to be very close to that $56,000. I would pause. This feels like when you're going through a storm like this, I don't like making a giant financial decision. And because we don't know when he's going to have stable income, let's wait until he does and then look at the pile of money we have. And so if he has his income back, he's rocking and rolling, and now we have this pile of cash we can throw at the house, I would do with that.

Well, I have a quick question, Chris, and I may have misunderstood. If the $56,000, you said, would that include your emergency fund money? Yes. No, we don't want to use that. No, no, no, no, no, no. Because you have no house payment. Now the HVAC is out and now we're extra screwed. You see where we're going here? Okay. Yeah. That emergency fund is for an emergency. Now, let's be clear. Him losing his job feels like an emergency. Yes. I know. I know. And I do not want in any way to minimize that. Okay. because the research shows, the psychology research shows, George,

that losing a job has the same traumatic impact as losing a loved one, okay? So I feel bad for your husband too, especially the way you answer that question. We're not even quite sure what's going on. I didn't want to dig into that because, frankly, it doesn't matter. But that emergency fund must stay in place for emergencies he's got a little bit of breathing room does he have three months of breathing room you said maybe not but he's got a couple of months he's also a paramedic an experienced paramedic my guess is he's got some options true or false uh he is he's done with the medical field he's 28 years as a

medic has taken its toll on him okay physically emotionally so he's done with the medical field. He's 28 years as a medic has taken its toll on him physically, emotionally. So he's done with the medical field. So he's now looking at changing careers and trying to figure out what that looks like. But let me just say this. If I had him on the phone, I'd go, listen, man, this sucks the way it happened to you. I don't like it. You weren't treated with dignity. And I understand you've been burned out.

You've been doing out, you've been doing it a long time, but the absolute worst thing that he can do is just sit and look for jobs. And I don't mean sit as in he's going to be lazy or whatever, but this idea of just kind of soaking in this loss and looking for a job. He needs to go work. Do you understand what I mean? And he is. Oh, he is. He's working a side job?

Yeah. Where does that figure into the numbers? So give George, so what's he making? Because if he can even make $20 an hour, $25 an hour doing something, that adds into the budget here. Now we can cover all the bills. So he's applied for nine different jobs. He had an interview last week and they actually offered him a position, but he, leaving that, he felt like God said, no, that's not your job. It would have been a fourth of what he was making, and he just did not feel like that was his next. I feel that. But what's he doing now?

What's he making? So our soon-to-be son-in-law has a construction business, and they just started a big project. So he is five hours from our house working for him. And I don't know. There was no agreement on how much he was going to be paid. He felt like this is what he was supposed to do, and so he was just being obedient. And so that's what he's doing. So I don't – it's not going to be consistent, and I don't know how much that is at this point.

I think we need to get that on paper because if he's making $4 an hour, I'd rather him go into work at Burger King down the street. That feels a little weird. This is the soon-to-be son-in-law. Hey, pops, come work for me. We'll figure it out once you get here. I don't like that. And here's the other thing. He needs to be bringing in consistent income. Yes. Yeah, he knows that, and he does. He is a great provider. He has always been a provider. That's why he's been in this stressful, extremely stressful job for 28 years. So I have no doubt that he is going to provide and do what he needs to do. I think this was a opportunity to go do something that he already knows. His side gig has been doing construction.

So even when he was working as a paramedic, he did basements and remodels and bathrooms. To me, that's the bridge. That's the bridge. Don't sell your house. Don't empty the emergency fund. Okay. Is that what I'm hearing, George? Yeah, she's saying, should I pay off the house? I would not pay this off until we have... I'm sorry, yeah. Let's get through all these crazy storms with the wedding and college and let's figure out what the new normal looks like. Then let's look at the buckets of money we have and go, all right,

we're ready to pay off the house. But do not clear your emergency fund for this. Please. And you're in great shape. George, $56,000 is doable once he gets a reset. And he's there. They'll pay that house off pretty quickly. Let's get some clarity on this income ASAP.

Let's figure out what he's getting paid hourly or for the job, for the project, and make sure it's worth his time. Because he's too talented to be wasting it not knowing what he's getting paid. Yeah. Wow. I hate to hear that.

Oh, you know what? I want to send him Ken Coleman's book, From Paycheck to Purpose, as well as the Get Clear Assessment. There it is. Because he's at a crossroads. I'm not going to call it maybe a midlife crisis. I don't know. You took the words right out of my mouth. It's what he needs.

So Ken's resources will help. Hang on the line, Chris. We'll get you From Paycheck to Purpose, Ken's bestselling book, and his Get Clear Assessment. Love that. All right. Quick break, and we'll be right back. This is The Ramsey Show. Hey, you guys. Health insurance costs are only moving one way, and that way isn't down. And if higher costs aren't enough, the wait times to see your doctor are longer, and it's harder than ever to get anything approved through the bureaucracy. So if you feel like the system is working against you, try a biblically-based alternative to health insurance, Christian Healthcare Ministries.

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Welcome back to The Ramsey Show. I'm Ken Coleman. I'm joined by George Camel. We're That's chministries.org. Atlanta, Georgia. Tammy's there. Tammy, how can we help? I apologize for my friend, Ken. She chuckled. I heard a chuckle. That was a pity chuckle. I know a pity chuckle. That's not a pity chuckle. That was involuntary. It made her laugh, George. See, look, there's more of it. She's an easy laugh. How's it going, Tammy? Tammy, how can we help? Hi there. Thank you for taking my call. You bet. What's up? Well, I moved to Georgia a year ago. I'm actually born and bred in California. Okay. I made some big decisions last year. I apparently was following the baby steps before I knew about the baby steps. That means you have common sense wisdom. I'm sorry? That means you have common sense wisdom. Yeah. It's a great sign. Well, maybe in part.

Uh-oh. I feel like something else is coming. I own my house free and clear. I have zero debt. I have $25,000 in my slush fund, so I have more than enough for my three to six months emergency fund. I have $250 that I put in a CD once my stepfather passed, and I put it there because I didn't know what to do with it at the time. Okay. So it's sitting there now.

My son is a financial advisor. Please don't tell him I called you. All right, we won't. He wants me to invest it. Sounds like a financial advisor to me. Sneaky. I am perfectly comfortable when it comes to real estate. I've owned eight properties,

um, over time. Um, but investing in the market scares me to death. I am actually considering taking no more than a hundred of my two 50. And I'd like to consider buying a property in Italy. Reason being is that I've got another seven, 10 years working life in me, but my dream is to travel and I would love to have a home base and in the next forever, as long as I'm working, I can go there as my home base and travel throughout Europe when I have vacations. And when I do retire, I might find myself with options. Are you seriously considering living in Italy full-time once you retire? It's a consideration.

Where in Italy, I have to ask? Central. Central. Northern Italy tends to be more expensive. Southern Italy. Can you buy property in Italy for $100,000? Yes, sir. Wow. Cash all the way, or is that a down payment? Yes. Yes. Wow. I think Ken and I are now considering it. I'll be honest with you.

Now, we're not talking about a villa in Tuscany. Sure. We're talking more of a townhouse in Abruzzo, okay? But it would be a home base. That's where my mind was going. Glad you brought that up. That's exactly what I was thinking. I've never heard of that place, central Italy.

But it can't be that bad. I bet it's lovely, isn't it? It's beautiful. The Maiella Mountains, the Adriatic Sea, you're in between the both. So this is a great dream. So what is the dilemma here? Yeah, what's going on? I've done all my have-tos.

I've been divorced for 13 years. I've raised my children. All of them are doing wonderfully. Great. Are you looking for permission to pay cash for a house in Italy? I'm sorry? Are you looking for permission to pay cash for a house in Italy? I'm sorry? Are you looking for permission to pay cash for a house in central Italy? I'm looking to know if I should rather invest $250,000 in the market

and not have a piece set aside for my dream, that that would be a bad idea. I don't think there's bad ideas. I just think you're looking at it very black and white, and I think there's a whole lot of gray here. So here's another option. What if you take $100,000, you buy the spot in Italy, and you still have $150,000, and you invest that into the market, maybe in a taxable brokerage account, into index funds, where you don't have to, it's not a distrust.

I mean, that's what's going to appreciate over the longterm if history plays out. And so that, that's what Dave Ramsey does. I'll tell you that he loves real estate more than anyone I know. He owns more real estate more than anyone I know. I'm second in line. And so if you're second in line, Dave would say, hey, when I get a pile of money, I park it in index funds until I'm ready to buy more property. George, tell Tammy what the historical return has been in the stock market. 10 to 12%. Did you hear that, Tammy? Yeah, but that had not been my experience or the experiences I've known from very close friends. Well, you have not been investing in the right things.

Have they been, wait, wait, wait, wait, wait, wait. You're close friends. Have they been buying stocks, single stocks, and playing that game? Or have they been investing long term? My background is mortgage banking. And so, of course, we have 401k and all that for the employees. And I had one lady friend who had to put off retiring for eight years when she was ready to retire because her 401k plummeted. The last year I was working, I just quit last year. I was in California, quit my job, sold my house, blah, blah, blah. But the whole last year that I was working,

my 401k was costing me more than I was putting into it. Yeah, but what's it doing the last four or five months? You've been looking at it? I have no idea because I put my job in. It's climbed back. It's climbed all the way back. You just told me, I'm going to buy this property seven to 10 years out. This is a good investment.

So you're a long-term thinker, but not when it comes to the stock market. That's what hurts my brain. I'm a fear thinker when it comes to the stock market. I know, but Tammy, you know what fear is based in? The unknown. You just admitted to us. I'm not educated. I'm more educated in real estate than I am certainly in...

I know, but what we're telling you is George just told you... Sit down with your son. He's a financial advisor. Have him show you. Say, hey, show me the history of the stock market. Show me the history of the S&P 500. Tammy, your 401k climbed all the way back over the last four or five months. In 2022, the S&P 500 was down 18%.

Can you guess what it's doing right now in 2023 so far? Take a guess, Tammy. Give us a number. I can't even give you a number. It's over 20% up. But the thing is, is what if it goes down at the time that I need to retire? You're not cashing out the entire 401k in one year, Tammy. You're going to withdraw only what you need.

So your million dollars may go down to $800,000 temporarily, but you're not withdrawing $800,000 at a loss. You're going to withdraw $50,000. Do you own a home right now in the atlanta area yes you did say that yeah what's that worth about 375 yeah so you sell that when you're going to italy anyway and you're just putting that no i actually i i'm well i'm not while i'm still working the next seven ten years how overlong that he's saying 10 years What I'm saying is when you finally check out ten years from now, if you go to central Italy or not, you're selling a house in Atlanta.

You're going to be traveling. So that's more money that's going to continue to climb. You're going to be fine. What's your nest egg today? What are you worth? $375, $25, and saving $250 in a CD right now. Okay. $650.

Okay. So if I'm in your shoes, I'm not at a million yet. I'm not at a million yet. That's my thing. Let's increase our net worth. It seems very frivolous. Yeah, taking 20% of your net worth and throwing it on an investment property right now, I would not do that. You have no retirement accounts from all those years in banking? I do not. I think it's time to get started. You didn't contribute

back then because you were scared. Well, initially, way back in the day, it wasn't really a thing. When it started to become a thing, not everybody was involved. It evolved into a thing where it's mandatory. You had to put at least 2%. I understand. All right, here's the deal. I think you should listen to your son. It's something that's evolved over time. And then there was a period of time I wasn't working because I had three children and I had one child with special needs. Sure. So I wasn't... You're amazing. Yeah. You're amazing. You're in great shape. You have seven to 10 years to pile up retirement cash. That's what I heard George say. Right, George?

Yeah. I would be piling up cash, start investing now. The best time to plant the tree was 20 years ago. The next best time is today. So let's get started. Don't be scared of the market. You've got a ways to go to get your nest egg to where you can actually retire. So let's focus on that first before we jump to this dream.

And you can always just travel and just rent a hotel, rent an Airbnb. You don't have to drop $100,000 to travel. Just another option. George, you're so smart. So smart. I love that. Like Tana. I like her. She's great. This is The Ramsey Show continues. We're thrilled to have you with us. 888-825-5225 is the phone number. George Campbell joins me. I'm Ken Coleman.

Let's go to Gage, who joins us now in Salt Lake City, Utah. Gage, how can we help? Yeah, so I am in, not really any financial issues, I guess, but, um, I just, like you guys said, the last call, um, I couldn't plant the tree 20 years ago. So I'm starting today. Um, I have never cared about money. I've always been a, if I have $1 after all my bills are paid right before I get paid again, then I didn't spend that last dollar. I've never been money-oriented. That's not part of my value system.

But now that I'm engaged and I'm moving along with my life, I decided to take myself seriously. So I started looking at YouTube videos, and I found George's YouTube channel that's brand new. How about that? That's perfect. Oh, man. Can I say it is pretty funny? I do love all the cuts that you throw in there. A little heavy sometimes, but they are hilarious.

Thank you. All right, George is taking production notes. This is great. You get to hear directly from the people. Thank you for that, Gage. I appreciate that. Lighten it up a little, George, would you? Lighten it up. Exactly, yeah. It's a financial YouTube

channel, not a comedy show. Geez. I think we need more comedy and finances, don't you, Gage? That's what I'm going to tell her. I got you to watch. I mean, hey, they say money can't buy happiness, you know what I mean? That's true. How can we help today? So I moved back to my hometown in Roosevelt, which is just a couple hours outside of Salt Lake. And there's nothing to rent. There is nothing cheap to buy out here. We're in a labor boom. And so there are people flooding in.

The trailer parks are full. The RV campsites outside of town are full with people living here and their campers. Basically, my only two options to get into a home are, for one, I stay with my mother and her husband for the next 18 months or so until I can get the rest of my down payment for my new home construction done, or I buy myself a camper and go into debt right now and do the same thing everyone else is doing to have my own space with me and my fiance. Everyone is broke, Gage. I don't know if you've looked around, man, but I'm not going to do what everyone else is doing. So I don't like either of these options right now. What's your income? Agreed. Around $100. I work, it's basically a day rate. I get paid by the load, but it's usually $500 to $600 a day.

Awesome. Good income. Okay. And how much do you have saved? I've only got a thousand. I was paying all my bills, quadruple payments, and I had 10 grand in savings. And after I watched your YouTube channel, it led me to the baby steps. And so I dumped 9,000 in my debt. I've got about 18,000 left in debt, consumer debt cars and tool trucks. I used to be a mechanic, so they are not cheap. Can you sell any of that stuff? Not really. I mean, I could, but they're so expensive that they depreciate extraordinarily fast. So I'd be getting literally pennies on the dollar.

But you said you used to be a mechanic. So are you using the tool truck still? No, no, no. I'm not adding any more tools to my collection, and they're almost paid off. Okay. I wouldn't keep it around if you're not using it. I'd still sell it even if you're not using it i'd still sell even if you're not going to make what you don't i i have all the equipment to work on my own vehicles and i do

um so every time i need an oil change tire rotation uh swapping out tires on um our semis and stuff like that at work so i do use them and they make my life and my job easier. Okay. I mean, yeah, I could sell them, but I've got $20,000 into it. I'd get four, maybe. Well, here's the deal. You've got debt and home ownership is not on the current horizon. We've got to clean up this debt, pay off the 18K, get a fully funded emergency fund, then begin saving up the down payment. So that is the plan. I don't like the idea of you. I mean, how old are you? 27.

Okay. So you're still young. You've got plenty of time. If you did move back in with mom and her husband for a little while, I would have real strict parameters on it, and I have a real strict savings goal saying, hey, I'm going to clean up this debt and walk away with $10,000 in the bank with my emergency fund.

Then I'm going to go rent somewhere, even if I have to get four roommates. Now, if I'm in your shoes, I might just go get a bunch of roommates now and make something work. Well, the issue isn't really financial there. It's availability. Can you move? That's the problem is that i i can't find anywhere you can't move anywhere in the country i just don't believe that okay so sorry sorry sorry sorry sorry the job i'm at is um very i don't know how to say this. It takes no skill, but I also have no skill. So I'm a truck driver in the oil field. You have to know somebody to get these kind of high paint.

Like I could go anywhere. And if you move to the next town over, you can't continue this job? Not, not, so I've checked. So Duchesne is about 45 or 30 miles away. And Vernal is the next nearest town, which is about another 35, 40 miles away. I constantly have been looking in there, and I have not found any. Okay, so I found one one-bedroom apartment for $1,500 a month. Okay.

That was ridiculous. It's just the environment here. Man, Gage, dude, I'm on team Gage. I'm trying to root for you. You're not rooting for yourself. At every single turn over the six minutes, you've had excuses and why you can't and how this is the only option. And the longer you live like that, the longer you're going to stay broke.

You just said that you didn't have any skills. That's just simply not true. So I didn just said that you didn't have any skills. That's just simply not true. So I didn't mean that, like, I don't have any skills. Like, I'm licensed to hell. I have my Class A. Gage. TDL. Gage.

I've got a ton of stuff. I know. I'm wondering, so what are my options then? What is there? Because I've looked into the roommates. I'm not idly sitting by in my mother's house taking advantage of her. Get a two-bedroom with a roommate. That brings your rent down to probably $1,000 a month.

Boom. If there was a two-bedroom available. You're telling me in the next month there's going to be zero rentals available across your entire 40-mile radius. I just don't buy that. I'm telling you in the last three months, I have not seen anything. I think you're not looking hard. I just don't buy it. What's the big challenge? I feel like we're, what's the big problem you want to solve?

What is it? So I, like I said, I've been paying off my debt like crazy. By January, I should be debt-free and saving up. And so I'm currently living with my mother right now. And I'm wondering, should I get this camper and live out there? Do not get the camper. No, I'd rather you stay with your mom. I get it. I'd rather stay with your mom and get out of debt. Follow our baby steps.

Stop trying to make this more complicated. I know, but I'm trying to encourage you with a little bit of like, hey, no nonsense. I don't care if you stay with your mom for a while, that's fine. But either go get a roommate, stop making excuses as to why you can't find a place to rent. But if you want to stay with your mom for a while, as long as you're being intentional and getting out of debt and walking our baby steps out, then I'm fine with with that but that's a short-term solution because you need to fly and i think there's something over him you know you make a hundred thousand dollars you can afford 1500 bucks and right yes you can it's fine but i'm not going to argue with him on that it's like okay yeah if he can i mean to say that there's no place to rent and you can find the

trucking jobs all over the country. So you're not stuck. That's the problem. You just feel like I'm stuck. There's no options. I got to go into debt. And that's only going to compound the problem right now. It's time to fly.

And I think getting out of debt will give you a little bit more confidence. I feel a blanket of self-doubt that's hanging on this guy. And I hate that for you, Gage. I want to help you a little bit. Hang on the line. I'm going to give you two resources. One, the Get Clear Career Assessment. I think it's going to give you a level of self-awareness you've never had before. And I'm going to give you my book, From Paycheck to Purpose, which is like the field guide that'll lead you up the mountain that you want to climb professionally. And the Get Clear Assessment will

help you to identify that mountain. But man, stop making excuses and move forward. This is The Ramsey Show. Welcome back to The Ramsey Show. I'm Kent Coleman. I'm joined by George Kimmel. Thrilled that you are with us. Our scripture of the day comes from Ecclesiastes 3.11. He has made everything beautiful in its time. He has also said eternity in the human heart, yet no one can fathom what God has done from beginning to end. And from Ecclesiastes to Adam Sandler, because why not, our quote of the day, you've just got to give yourself time. That's good advice, I think. Give yourself time to figure out what you're good at and what you're not good at. Can you do that in the voice?

Do you have an Adam Sandler voice? I think I would offend all people groups if I even attempted. It's a tough one to do. Well, you got to get a little nasally. You got to get up high in the throat. That's where you start. You know, it's like, so you just got to give yourself time. That's good advice.

Oh, that's actually pretty good. Yeah. I like the fact that- I mean, that was without any rehearsal, so I was very nervous doing that. Thank you, George. The best part of that quote is the fact that as soon as he started it, he reflected and said, I think that's good advice. Yeah, because he's so real.

Yeah. Now I can definitely do— It's the neuroticism. Him and I share that. Yes. Oh, he's hilarious. Let's go to Anna in Birmingham, Alabama. Anna, how can we help?

Hey, guys. Thanks for having me. You bet. Let's go to Anna in Birmingham, Alabama. Anna, how can we help? Hey, guys. Thanks for having me. You bet. What's up? So we are on baby steps four, five, and six, and we are looking forward to upgrading our home to expand our family a little bit more in the future and want to make sure we make the best choices

to not set us back in some of our other goals in the future. Okay. Give us some of the details. All right. So we bought our current house in 2021, amazing interest rate, 2.5. Wow. And we have, yeah, just really looked out on that one. We don't have any other debt. It's just a mortgage now. And we still owe close to $150,000 on it, and we are looking forward to buying another house in the next three to five years.

And really, I don't know, you know, is it worth acting like we're back in step 3B and just piling into our equity and, like, pausing retirement, pausing 529, or do we just chuck along with what we've got going on now? Why would you pause retirement? Just to pay the house off a little bit faster and get more equity in there. I wouldn't pause retirement.

There's no point unless you had some kind of emergency storm where you would ever pause retirement in baby steps four through six. So I would continue just paying down the mortgage as much as you can. Once the retirement's set, you've got a little going to the 529 plan for the kids, then put whatever's left towards the principal on the mortgage. Okay. And you said this is three to five years from now. What's your income?

Right. A loaded question somehow. It's 63-ish. Is that household income? Yes. Okay. So this is going to be tougher to pay down the mortgage and upgrade to the new one. What's the new one going to cost? That's what we don't know. We're kind of using, you know, as much as we can put equity in this would help us make the decision on that. Okay. And what's your current house worth? It is worth now $235,000. We bought it for $165,000. Interesting. How much did you put down? Like $9,000. We had like the lowest.

Is this a third year? Yes, it is. Okay. I would just continue paying the house down normally. Do not pause retirement because you have the Opportunity to retire broke if you pause it now to try to pay down this house And I want this money to compound for you guys And so there's a balance here There's a delicate dance in baby steps four through six and you don't want to put all those eggs into one thing So first comes retirement then college then we'll pay down the house and um, you this is something that was, I don't know, George, what you think about this. This was a mental hack that I came up with early on when I first bought a home.

I started looking at the amortization schedule. Love those. Do you? They fire me up. Yeah. So do you look at yours? Yes, we have. All right.

And I'll put like outrageous little numbers in there to see how can I pay it off in one year? Well, but again, instead of just... So keep pouring into retirement, okay? But by looking at that schedule and going, all right, if we were to put in just one, you start with one extra mortgage payment a year, what would that do over the next three to five years? We're working with the game plan you just gave us, okay? And then if you go, okay, if I do, what if I put in the equivalent of three or five and just see how that, because I just think you're going to get more equity over the next three to five years than you realize just by putting in a little extra where you can, but continuing on retirement. Does that make sense, Jordan? I wanted to see that she's still making headway.

The biggest piece of this equation, as I look at it, is increasing your income. Without question. That helps. You guys, have you joint income $63,000? Yeah. So I stay home and homeschool the kids, but I'm also, like I work part-time, but it's, I mean, like $7,000. What does he do? He works for a church. Wow. Well, see, that's limited.

I mean, it's just not like the corporate ladder. So, you know, side jobs, you know, things of that nature, maybe a side hustle business that you guys can get up and running. Maybe that generates $25,000, $30,000 a year. You know, those are the kinds of things you can do. But right now trying to upgrade in-house is not the news. Not a good idea. And definitely don't pause retirement. George is right. You want to keep that momentum going. So this might not be a three to five year journey. You might need to upgrade later on. You might need to make a more lateral move. You might need to make do with the

space you have. But right now, the income is what's limiting you guys. Yeah. Well, thank you for the call. Let's go to Sally now, who joins us in Austin you guys. Yeah. Well, thank you for the call. Let's go to Sally now who joins us in Austin, Texas. Sally, how can we help? So my question is, I'm currently on baby step number two, but I have already started five, completed six, and have an emergency fund. Basically what I need help with is I have money in those accounts to pay off all debts. Would that be a smart move or would it be better to just start with the snowball method now with where I'm at? By accounts, what do you mean? Layout, what's in the accounts and where they're at? So my kids' college funds, both of them already have

$50,000 in each account. Home is paid off and in our emergency fund we have forty thousand dollars our total debts only equal one hundred and twenty four thousand dollars what are those debts so i have those debts are a truck payment and a construction loan what's the truck payment what's left on that um we have, well, we pay monthly $1,200. On the truck? Yes. What is this truck for? Does it come with a refrigerator and a microwave? No, it's just an impulsive purchase that we enjoy and have fun with. I hope so.

But I mean, we don't struggle to pay it. It's not an issue. What's your household income? But it's something that we want to get rid of. Household income is $180,000. Okay. Fantastic income. What can you sell the truck for? And what's left on the loan?

The loan is $47,000. Okay. And it is worth more. I think we have an equity of $10,000. Okay. Here's a plan. I don't know that you're going to do it, but if you sold that truck, it would leave you with $77,000 or so on the construction loan? Correct. And then you could take the majority of that emergency fund, because right now you're in debt, so you're in baby step two, which means we have a thousand dollar emergency fund that would then cut your construction loan about in

half and now making 180. How quickly can we pay off the remaining, you know, 30 grand, 35 grand probably within four or five months. Correct. Boom. So the plan I just laid out, you are completely debt free and you'll be back to having a fully funded emergency fund with probably within i'd say eight months at this rate right i i guess i mean essentially i mean i could be out of debt tomorrow but do well that's saying you're going to cash out your what do you do not take out a hel. Do not cash out these college plans. Don't touch any of it. Right. That was where my question was. No.

Is it dumb to hold on to the money that I've already saved? It's dumb to withdraw it with all of the penalties that you're going to pay. Correct. That is going to be a giant stupid tax, so it is not wise to do that. Use any liquid cash that has no penalty, which right now is only your emergency fund. That's the advice. Take it or leave it. It's what I would do. It's what Ken Coleman would do. We want to see you debt-free with a peaceful

life. That's it. That's our vested interest. That's all we needed was a little bada-bing, bada-boom. Bada-bing, bada-boom, you're debt-free. There it is. That's what we all come here for, folks. George Campbell, great hour. Thank you, sir. Always a joy to be with you in the studio. To our fearless leader, James Childs, thank you. And the team behind the glass. And you, America, thank you. To wonderful folks in the lobby, you all are amazing. This is The Ramsey

Show. Hey, it's George Campbell. 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 on 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.