The Ramsey Show - App - Should I Start Flipping Houses?

Episode Date: June 1, 2022

Dave Ramsey & George Kamel discuss: How to get on the same page as your significant other, The best way to get into real estate investing, Whether or not you can afford a Mustang, Making the mental shift to saving for a house. Want a plan for your money? Find out where to start: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6

Live from the headquarters of Ramsey Solutions, 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. We help people build wealth, do work that they love, and create actual amazing relationships. George Campbell, Ramsey Personality, host of the Fine Print Podcast on Ramsey Networks, is my co-host today as we take your calls about your life and your money. Open phones, 888-825-5225. That's 888-825-5225. That's 888-825-5225.

Mary starts off this hour in New York City. Hi, Mary. How are you? Hi, Dave. How's George? Thanks for taking my call. Sure. What's up?

So my boyfriend and I have been dating about a year and a half now, and we obviously keep budgeting and financials separate and everything but I've learned that we have definitely very different backgrounds when it comes to money he has grown up where he doesn't really think about money things are just kind of paid he spends what he wants he doesn't really think about it and I am the exact opposite um and as we're looking into the future and, you know, what that means for our relationship, I would like us to get on the same page. So I've started talking to him about that because I know he has a little bit of credit card debt,

but he doesn't really know and he doesn't really pay attention because it's never really, he's never thought about it. He's really, really open to learning. So I started actually playing your show for him, but I'm realizing very quickly that there's a lot of information that I have learned from listening to your show that I'm just not really, it's just so much information. I don't know how to like teach it to him without getting overwhelmed. And I'm just wondering where we should start as we look to the future and you know, what that means for us and how I can help him, you know, get us get on the same page. Wow. That's awesome. Well. Well, you sound very mature. How old are you?

I'm 28. And how old is he? 27. Okay, very cool. Well, you know, trying to teach him all the stuff and go, well, here's what you need to be doing, I don't know that that's going to work in the long term. What I would do is start to create a vision for the future,

and then these principles become a part of how you get there. It becomes the game plan. That would get me more excited if I'm in his shoes personally. Yeah, rather than you don't want to become his mom. You didn't sign up for that. And he doesn't want you to become his mom. You really don't want to be that. And so George is right.

Let's pull him in instead of push him in that sense. So it might sound something like this, Mary. Here's some actual things you could say, okay? The number one cause of divorce in North America today is money fights and money problems. So if we are going to be married someday, and it seems like we're moving in a positive direction with this relationship, then we, at some point before we're married, need to address the number one cause of marriage problems. To ignore that would be like stupid, right? Right. problems to ignore that would be like stupid right right and so i mean if the number one

cause of death of male four-year-olds is bear attacks well you keep male four-year-olds away from freaking bears i mean this is not hard right you know i mean what i made that up but i mean you know what i'm saying right so whatever it is this is the number one cause. And so it's not number three. It's number one. So, I mean, if we can protect our marriage, and I love you, and if we can protect our future relationship, and I love you, against the number one problem, we should really get the antidote ahead of time. We ought to drink a bottle of the antidote, right?

And so we've got to begin to talk about that. How's that sound to you? And he's going to go, well, yeah, that makes sense because it does make sense. Well, and here's the thing. I grew up one way. You grew up another way. I'm a lot more of a tightwad, a lot more administrative minded. I'm kind of the nerd of the two.

You're kind of the free spirit of the two. So it's not as natural for you to freak out about this stuff. And I stay freaked out about it all the time. Right. So you need to tighten up a little. I need to loosen up a little. And we need to learn to work together and be grownups together on our future goals. And, you know, here's a format we could do this in.

Like we could take Financial Peace University as a relationship-building class, although it happens to be a money class. Right, yeah, he's very open to that. He really wants to learn that. One positive thing is that he definitely does not want me to just tell him what to do. He wants to learn. He knows how important this is to me. Good, then you're marrying a man and not a little boy.

Yeah, that's good. Yeah, he wants to learn. I don't know how to teach him, I guess. I don't want you to teach him. I don't want you to teach him. I want him to want to learn, and he'll find it. If you put our stuff in front of him, he'll learn it. He just needs to reason.

He needs a reason to go do it. And the reason is that it's not my nature to go do this this is him talking to himself but uh this woman mary is worth it and she's telling me this is kind of you know it's kind of permission to play here you know if we're gonna be in this i'm gonna have to deal with this and so i you know this ain't going away i gotta deal with it so i'm gonna go in here and learn this stuff and get good enough at it so that I get married. Right. Mary, have you been through Financial Peace University?

No, no, I haven't. Okay. Well, let me make that our gift to you guys. If he's willing to go through it, obviously you are. So that's one year of Ramsey Plus. It includes all the videos in Financial Peace University and Every Dollar Premium. And if you guys start to lay this out and start to have that vision, I think it'll get him excited about doing the plan instead of being forced into it. It's the best pre-marriage counseling there is because it addresses the number one thing.

I'll give you the next three if you want them. All the marriage data says if you can be in agreement on money religion kids whether to have them and how to treat them are the inmates going to run the asylum or are you and in-laws the crazy people in each

of your family how are you going to keep them at bay if you can deal with the in-laws and the outlaws and the kids and the religion and the money, and you get on the same page of that, and you've had deep, good, rich discussions in your pre-marriage counseling process, you have like a 90% probability of having a successful marriage. Those are the big four that break the four horsemen of the apocalypse that break up more marriages than anything else. And that's what all the data from the marriage people tell us.

And we found all of that because we discovered we had the number one. That's pretty amazing, though. If you know that going in, you go, well, yeah, let's do everything we can to be aligned in all those areas. I hate God. I love God. They're going to be troublesome. Not going to work out. They'll be troublesome.

You know, I don't want kids at all. I don going to be troublesome. I don't want kids at all. I don't even like them. I don't want to be near them. I want 17. There's going to be a problem here. Let's talk about that beforehand. We need to know these things. Don't wake up later and go, I don't know. You need to know. You need to talk about it ahead of time. And go ahead

and just identify Aunt Sally Mae over there. She's the crazy one and uh you were just and she's not living here she's she's lived she's been homeless she's lived with every other cousin and she's not living with this cousin i'm just telling you because she's drunk all the time and she's not living here let's go ahead and get this out go ahead and get this out in the open all right and just go ahead and deal with it now because it's gonna come up yes gonna come up can't avoid it never happened in now, because it's going to come up. Yes. It's going to come up. Can't avoid it.

Never happened in my house, but it's going to come up. Sharon just says what we're going to do, and then it's over. That's a good man. There you go. Happy wife, happy life. This is the Ramsey Show. you've got a lot on your plate a job your home your marriage and your growing family while you're enjoying the present you can't help but think about your future and your finances. As you explore your options, consider Christian Healthcare Ministries, or CHM, for your healthcare.

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anxiety checklist. Open phones at 888-825-5225. George Campbell, Ramsey personality, is my co-host today. Kat is with us in Pittsburgh Ramsey personality, is my co-host today. Kat is with us in Pittsburgh. Hey, Kat, welcome to the Ramsey Show. Hi, Dave. How are you today? Thank you for having me. My honor.

What's up? Yes, I just wanted to give you a little bit of background about me. I'm married currently. Mark and I just got married on May 7th. And we are currently debt free. Thank Lord. And we have approximately about 70 to 80K in liquid. And we make collectively right around 70 to 75 yearly.

And what we are doing right now is we're renting an apartment. So with our rental, renting utilities, our expenses are right around $850,000 to $900,000 a month. And right now, we do have some crypto investments, and we'd really like to get into retail, I'm sorry, real estate investment as well. But we're not sure if maybe either moving into a duplex for our first home would be the right choice as far as making, you know, having a place to move into and obviously making some investment on the other side of that duplex. Or if maybe we should like buy a smaller home, fix it up and within a year's

time, maybe move out of that to another one and then just rent that home out or flip it. But that's what we wanted to ask you. Okay. Well, I think a precursor to the answer is the rule that we use at Ramsey is we give you, we answer your questions of what we would do knowing what we know if we woke up in your shoes. Okay? And by the time I started with nothing, and by the time I was 26, I bought $4 million worth of real estate.

I was doing flip this house before Chip and Joanna were born. Okay. Literally. I mean, I'm not kidding. It was the early 80s, right? And no disrespect to them but because they're wonderful but the uh um you know and uh i i was using short-term notes to borrow money to flip the house and make a profit i made a profit on almost every deal i did

and i still went broke because the bank got nervous and called all our notes at one time, and there's a word we use for real estate that sells really fast, cheap. So we ended up selling the real estate for less than it was owed on it, which was way less than it was worth to keep foreclosures from happening, and it broke me, and I lost everything in my 20s. Okay, so that's who's answering your question. I, by the way, do love real estate. I own several hundred million dollars worth of real estate today.

But after that, I quit borrowing money. And so that's the guy and the place that you called to get your question answered. You need to know that. It's in fairness, okay? So if you want to flip this house with money, borrowed money, and all that kind of stuff, you're really on the wrong show. You're not going to do what we tell you to do. Okay. So having said all that, you know, here's my answer on duplexes as your first property.

And then here's my answer on what we would do if we woke up in your shoes. The beautiful thing about a duplex is your renter lives next door the problem with a duplex is your renter lives next door can you tell i've been there okay so if they want something they can knock on your door but you also don't have much trouble collecting the rent because they're right there cars in the driveway you know and so we're going to get our money uh we don't have to wait on some uh thing to happen and so it's a you have to set some relational emotional boundaries if you're going to do that that's the problem it's not that bad the biggest issue i had with duplexes and i've owned i don't know uh probably a hundred of them, is that they typically are rental properties.

And so typically the buyer, when you get ready to resell them, is another investor who's looking for a deal. The buyer, when you get ready to sell that same square footage of house as a duplex in a single family, is a cute little couple that wants a picket fence and a place for their French bulldog to run around. It feels like a personal attack. Yeah, it was a personal attack, George. Just take it for what it is.

And they're willing to pay more like retail. And so single family homes of the same square footage within a two block area will go up faster in value than duplexes will. Because of who your pool of future buyers are in general. Now, a nice duplex will outperform a lousy single-family neighborhood. I'm not talking about it. I'm talking about apples-to-apples comparison, okay? So if you could find a really cool duplex in an up-and-coming, sweet, re-gentrified neighborhood, it might be a real seriously good play, right,

versus buying a dumpy single-family, okay? So that's your upsides and downsides on duplexes. What would I do if I woke up in your shoes? And, George, I'll let you chime in after the personal attack. But the – is I would pay cash for my first home as soon as I can, and you're very close to doing that once you have decided you don't like losing 50% of your money in Bitcoin. And so – How much do you guys have in crypto? Just curious.

Well, since we just got married, we haven't merged all that yet. I really don't know how much he has. I have approximately, just shy of 10 grand. Okay. You guys are much... You like risk more than I do, but I've been broke.

That's another thing you need to keep in mind. I don't like risk more than I do, but I've been broke. That's another thing you need to keep in mind. I don't like risk much. I don't like losing money. I lost a bunch of it, and it's too hard to make. I don't like losing it. And I know that because you're playing with lottery money over there. Cryptos, you know, you've lost your butt on it. And I'm going to stand around acting like you did something

cool you know it's just it's it's it's horrible so i'd be getting out of that i'd be buying some real estate i paid cash for george yeah i mean you guys don't have a home currently right primary residence right that would be my first goal i wouldn't mess with the duplex and plus they're really hard to find right now because you're not the only one who had this awesome idea and so if i'm you i'm getting into a primary residence with the money you have put a strong down payment down work on paying that off as soon as possible and then man the world is your oyster pay cash getting this what i did after i went broke cat was i got my house paid off took me a little while then i saved up to pay cash for my first rental not the sexiest answer though and they want you

know what happened you know what happens with a rental that you have zero debt on? Cash flows like a bandit. It starts just stacking money up. And I'm able to pay cash for the second one fairly quick. And you got two of them sitting there with zero payments. You're just stacking money. And you can buy the third one.

Then you're just stacking money. And ever since then, I've been just stacking money and you can buy the third one then you're just stacking money and ever since then i've been just stacking money and then i have some idiot walk up to me and go you're so lucky luck didn't have squat to do with it duber i used a system and a process you know but dave the renter is going to pay my mortgage no they don't because renters don't always pay can you say pandemic can you say eviction moratorium yeah yeah yeah you can't get them out and you know what i had some people that were had some serious problems during covid and i could be gentle as a landlord because you don't need the money because i didn't have to have the money to eat. You know, I had one that had cancer. I don't throw somebody who's got cancer in the street.

I'm not heartless. Now, you know, you beat your wife and you don't pay your bills, I'll put your crap in the street. But, you know, but the thing is, you know, you can be gentle when you don't have any payments. It changes the whole world, Kat. It takes a little longer, but I've done detailed research, and 100% of the foreclosures occur on a home with a mortgage. This is The Ramsey Show. We'll be right back. Hey, we want you to stop by and visit us at Ramsey.

We're in Franklin, Tennessee, just south of Nashville. If you're ever around, we have a huge visitor center. You can watch the show. We do the show live every day for radio, podcast, and YouTube from 1 to 4 Central. The cost to watch the show is astronomical if you want to be in the studio audience. It's somewhere right around free. Okay? And so is the coffee. So is the cookies.

And you get a free mug, too, while you're at it. Really? Yeah. Did you know that? We still give out coffee mugs? They got new fancy ones. I thought I got rid of that. That did not leave the budget.

Oh, my gosh. Inflation did not affect that. Wow. I was trying to cut costs around here, so you never know. You can always get rid of me. In the lobby also of Ramsey Solutions is the world-famous now debt-free stage. On the world-famous debt-free stage is the world-famous Matt and Mindy. Welcome, guys.

How are you? Hey, Dave. Good to have you guys. Where do you all live? Tulsa, Oklahoma. Cool. Welcome to Nashville. And all the way over here to do your debt-free scream, how much did you pay off?

Right around $126, $127. Very good. How long did this take you? About six years and four-ish months six years four months i love it and your range of income during that time uh we were around 65 at the time starting and now we're north of 200 hey i like that nice job what do you guys do for a living uh we own our own construction company now as of June of 21. Ah, okay. So do some owner's rep work, commercial construction consulting. And just that was part of the plan.

We didn't know it, but God did. Yeah, and you got good timing, huh? Yes, sir. Yeah, wow. Good for you guys. Well, congratulations. Congratulations. What kind of debt was your $127,000?

Started out with some credit card debt. That was the first one we knocked out. Then we purchased a home and had some home renovations, you know, about five grand in that, and then over a hundred in student loan debt. Oh, Sally Mae and Uncle Navient uncle navient oh ugly uncle navient oh my gosh way to go guys what in the world happened that set you guys ablaze six years ago well actually the story starts way before that um probably 11 years ago we um attended a wonderful church when we lived in Kansas City, and they mentioned actually it was a sermon, a Dave Ramsey sermon. So that was when we first

saw you and heard about you and got Total Money Makeover and then attended a live event while we were there. This was all before we had kids. So that kind of lit the fire. Which church? At the time, it was Indian Creek Community Church. Yeah, okay. And then it's since changed names, but shout out to our pastor, Steve Southards.

Yeah. And then that lit the fire. That really, like, it just spoke to us. It spoke to all of our needs. We had so many dreams in our heart for owning a business one day. Matt actually was in chiropractic school, which is what all the debt was for. Oh, my gosh. Yeah.

And didn't finish. Chiropractic school sets you up perfectly for construction. It sure does. Well, what we realized was we always wanted to own a business and run a business. And we just didn't know quite how god was going to lead us down a different path um and so it's been really neat to uh look back on that and realize like these dreams that were put in our heart now are coming to fruition in a different way than we expected but um but it's been so wonderful yeah yeah look back you see

god's fingerprints all over it all over but in the middle of it, you're going, what? Yeah, exactly. Left turn, right turn, what? Yeah. That was over a decade ago. Yeah. Six years ago, something clicked. So we were kind of Dave-ish, I guess you could say.

We paid off quite a bit before the six years, a good chunk. But we kind of, you know, we bought the house. We kind of did things out of order. We weren't really, you know, weren't quite as on track as we should have been. Dave Light. Dave Light. Different than Dave-ish. Ramsey Light.

Better than Bud Light. Yeah, yeah, yeah. And so we got, like, I don't know. We got kind of a fire lit in us. We ended up wanting to lead an FBU class. We thought that's going to really like shift our mindset back to walking the walk, talking the talk. So that was really.

Because you can't lead it and be a hypocrite. Right. Well, and also shout out to our current church in Tulsa is Life Church. We're Life Church members. I know you know our pastor, Craig Groeschel. Craig and Amy are good friends. And so there was another push for FPU and all of that. And so that really inspired us to get focused.

So we were back on track, focused on everything for a couple of years. And then COVID, well, actually before COVID happened. We have a few kids. And so we- Along the kids. Along the way. Along the way, yeah. So there were some pauses in the baby steps to set money aside for that. Cash flow the kids.

Cash flow the kids. We had a sinking fund for vehicle expenses that, you know, I mean, it happened. So we had our emergency plan, our emergency savings, that $1,000 we'd saved up. But then also, you know, we were driving, you know, we were driving some clunkers at times and those needed fixed. So we just set up a sinking fund that we put towards that, you know, vehicle expenses. So we had about four cars that we had to cash flow and, you know, switch out because they were high mileage, you know, cars during that time. A couple of babies during that time kind of had to pause flow and switch out because they were high mileage cars during that time. A couple of babies during that time kind of had to pause on the baby steps. Well, then things started to be a little unsure with work.

And so we kind of felt like we needed to pause the baby steps and start saving up money just as a kind of a caution. And then COVID hit. And, um, then COVID hit and we thought this is why, okay, this is why we, this is probably wise. We paused on the baby steps and saved up money. Um, Matt's salary got cut, um, by about 25% during that time, which was really hard. Luckily we were on your plan. So it didn't, it just changed our margin. It didn't quite mess with our budget too much, so we're grateful for that. And then things got back on track with his salary, but it still felt a little off at work. So that led you to opening the company. Yeah, so I actually attended another event by a wild at heart event that some guy or a guy at my church, actually our first, the first FPU class that we attended. Was John there?

No. No, there was, yeah, it was a small event there outside of Tulsa. And so we, you know, I kind of went into it thinking, I just felt like God was um and i didn't know what was happening you know i didn't really know but i came home that sunday evening and i said i i think i think we're going to do this and so we came on baby came on and so we set a plan in place and um you know you know there was a lot of unknowns insurance um you know oh there's like 9 000 employees um you know how are we going to do this so what do you tell people the key to getting out of debt is now that you've done it? Stand on the same page.

All the way through all this stuff. Yeah. I say commitment, too. I mean, I feel like you have to be committed. You have to decide. Take it off the table. I know I hear that all the time. No, I'm kidding.

I know you hear that all the time. No, you're right. You're right. That you take debt off the table. But really, I mean, when you commit to it, yeah, it's not going to be perfect. There's going to be mess-ups. There's going to be things that come at you. How does it feel now that you're free?

It's incredible. I mean, it's been such a dream. Let's bring the kiddos up with their names and ages. We got Oliver. Before I run out of time. He's almost nine. We got Louis. He is seven.

We got Genevieve. She is five. And we've got little josephine just two and a half they are beautiful they're so cute that's so fun we got a copy of baby steps millionaires for you that's the next chapter in your story for sure thanks dude also another copy of uh ramsey plus a one-year subscription you can give that away because you guys are old-time fbu people you'll find somebody that you can bless with a one-year subscription to financial peace university and total money makeover same thing you'll be able to give that away i you guys are old-time FPU people. You'll find somebody that you can bless with a one-year subscription to Financial Peace University and Total Money Makeover. Same thing. You'll be able to give that away. I'm so proud of y'all.

Well done. You guys are beautiful. Incredible family. Very well played. Very, very well done. Alright, it's Mandy and Mindy and the gang. $127,000 paid off in six years and four months, making $65,000 to $200,000. Count it down.

Let's hear a debt-free scream. Three, two, one. We're debt-free! I love it! Another family tree changed. Boom! Just like that. Incredible.

This is the Ramsey Show. Love it. Another family tree changed. Boom. Just like that. Incredible. This is the Ramsey personality is my co-host today. This is the Ramsey Show. Ellen is in Chicago. Hi, Ellen. Welcome to the Ramsey Show. All right. Hang on a second.

They didn't tell me that... I'll tell you what, I'll put you on hold and I'll go back and talk to Caden in Lincoln, Nebraska then. Hey, Caden, what's up? Hey, Dave, how's it going? Good, how can I help? Yeah, so I am 21 and I'm about to graduate college. And it's always been a dream of mine to own a Mustang. And I wanted your opinion on how much I could spend on that without messing up any of my other financial goals. You have any money?

Yeah. So I'm going to graduate debt-free in December, and thanks to my parents, and then I worked through high school to help contribute to that. I have about $13,000 in a Roth IRA and about $14,000 in the bank, $14,000. And you're graduating from, did you say college or high school? College. With a degree in what? Ag business. Cool. Have you got a job? Yeah. So I have a job lined up starting in September. And so that will be a full-time

job as I finish up school part-time. Good for you. How much will you be making? So that will be about 45 base salary and then I'll go up from there with commission and bonuses. Good for you. Well done. What are you driving now? So right now I have a Subaru Crosstrek and I'm using it for my internship and then I would sell that to buy the Mustang. Yeah, what's it worth? About $13,000. Okay. All right. Well, I love cars, so I get your dream, okay? Unless you're talking about the new Mustang, which I think is ugly as crud.

But anyway, I love cars. And, you know, I got a weak spot for boats. I just got some Mastercraft boats. I always wanted a Mastercraft ski boat, and I've had got a weak spot for boats. I just got some Mastercraft boats. I always wanted a Mastercraft ski boat, and I've had Mastercraft ski boats for years. And I just got the brand new ones. They're just amazing. So I love things with motors. I'm a redneck.

I love them. Okay, so I'm with you. But what I have learned is that I want my dreams to be done in such a way that they don't become a nightmare. Is that okay? Exactly. Which is kind of what you asked. be done in such a way that they don't become a nightmare. Is that okay? Exactly. Which is kind of what you asked. You just said it a different way. I want to do it wisely is what you asked.

So what are you thinking you should do? What do you want to do? So what I want to do is I'll get a company vehicle with this new job in September, and so I can use that for personal use, and so practicality doesn't have to be a consideration. And so I would sell my current vehicle, and then I'm trying to figure out how much more I can put on that and get, you know, newer, better, faster. You know how that goes. Okay.

So, I mean, you've looked at Mustangs. You've been thinking about this. What are you thinking about? I'm thinking about $20,000 to $25,000. But to me, I've always been kind of a tightwad. so that's that's a big number for me okay i think you're in range um the range that we use is a you pay cash and you'll be debt free when you do all of this if i understood you right correct yep and b you don't want vehicles things with motors and wheels to add all together because they all go down in value to be more than half of your annual income

if you're making 45 and you have a car that's worth 20 i mean that's okay it's not the end of the world i'm glad you didn't call me up and tell me you wanted to lease a new one yeah i knew i knew what you'd say to that one good i'm glad saved us't call me up and tell me you wanted to lease a new one. Yeah, I knew what you'd say to that one. Good, I'm glad. Saved us both a lot of pain. So here's my thing. You've got the company car, so this one's going to be sitting around a whole bunch, isn't it?

It's just kind of a weekend driver, essentially? Yep. Yeah. So in that case, it makes me less excited. You know, you're not going to be driving it all that much. So to spend $20,000, I would just look at your other goals. You said you had other financial goals, right? You're probably wanting to buy a house one day,

might need to save up for a wedding one day. You have other things going on in your life. You want to be able to invest 15% into retirement with your new job. So I would just factor all of those things in before making this purchase. I still think it's a wise purchase based on the parameters you set out, but I would also look at the opportunity cost of what my other goals are and what my future looks like. So here's the thing. There's nothing devastatingly stupid about what you're talking about doing, but you are parking $20,000 in something that's not going to go anywhere and it is most of your net worth okay so it would be okay to delay the purchase of the mustang since it is kind of a toy in a sense here a year and let's see what a year brings and you might end up delaying it two years let's see what a year brings and you might end up laying it two years let's see what

two years brings and that kind of thing i'm not saying don't live your dreams not saying you've always wanted on a mustang that's fine um now if you'll select the particular mustang that you're going to buy very carefully uh in terms of mileage clean, and the uniqueness of the particular car, what it's got in it, how it's built, all that kind of thing, that could ensure that you could resell it quickly and easily if you ever wanted to, say, fall in love and you wanted to buy a house with said queen more than you wanted said car. And you can unload the car at that point.

Don't get too attached to this crap. It's a car. And right now, it's not a this crap it's a car and right now it's not a great time to buy a car so that's another reason to wait and that 14 000 you have in cash that sounds like it's your emergency fund and so we need to save up outside of that so that when you sell your subaru you have the cash on hand with that money to then purchase it in cash yeah i'm probably waiting till spring and let's have a little cooling off period, and I might wait until the next spring. But I think you're on the right track, and the ratios we're giving you are there. It's a toy.

Pay cash for it. Never have more than 50% of your income tied up in things that go down in value that have motors and wheels. And I got a lot of junk with motors and wheels now because i'm kind of like you know i like stuff that goes wooden wooden you know i just do and so uh but that's but it's a very very small percentage of my world overall and that helps me stay sane and wise and all of those kinds of things ellen is with us now in chicago hi ellen how are you yes um i'm gonna try and make this as quick as i can me and my husband are 57 we are three thousand dollars away from paying on baby step two good and i'm having a problem doing a mental switch to be as intense for baby step three. How are you 57 and never had a devastating emergency?

You should be able to look back on your life and go, I really need a rainy day fund because sometimes it freaking rains. Well, it's more the length of time taking to do it. How long is it going to take? About a year. Nah. How much are you trying to save up for this emergency fund? Around $25,000.

And what's your household income? $170,000. Why does it take a year? So you have no payments, and you have $170,000 in income. It doesn't take a year to come up with $25,000. Why does it take a year? So you have no payments and you have $170,000 in income. It doesn't take a year to come up with $25,000. I don't know. I just, my brain is not set. You're making $14,000 a month.

Yeah. So let's get a plan for this money. Let's call it six months and be done with it. Okay. You get to $25,000 in the bank and then you'll relax in a place you didn't even realize you were uptight. Yeah. Most people do Baby Step 3 in six months, and you don't have an average income. You have an above-average income.

So it tells me you can do this faster. Yeah, we have an above-average income as long as I don't go out for short-term disability again. How often has that happened? It's happened, well, I'm on it right now. I'm just about to end it right now. And it happened twice last year. Okay, so your income is really not $175,000 right now. No, it's not.

What is your portion of the $175,000? Around, okay, I just got a price. A price, listen to me. I'm at about $64,000 myself. Okay, so he makes $120,000, $110,000. Yeah. Okay. Yeah.

Okay. So it might take you eight months instead of seven months. Let's pretend you had zero income. Let's call it eight months with zero income. You can save up $25,000 making $110,000 in eight months. But no payments. Yeah. You can do this.

And by the way, your life is an emergency right now. Why would you not want an emergency fund more than anything? You definitely need an emergency fund. You have all kinds of motivation. Look in the mirror. Right now, you're like, I've been out three times on short-term disability. This is a person who needs an emergency fund. Yes, go get you one, girl.

You'll feel better. I promise. This is The Ramsey Show. Dave here. You can find all of our shows with the Ramsey Network app on your smartphone. It's the only place to listen to the entire back catalog of episodes. Download the Ramsey Network app in your favorite app store today.