The Ramsey Show - App - Should We Pause Investing? (Hour 3)

Episode Date: February 6, 2024

🎵 Live from the headquarters of Ramsey Solutions, this is The Ramsey Show. It's where we help you win in your life, win with your money, win in your work, and win in your relationships. 888-825-5225. 888-825-5225 is the number. We'd love to take your question today. We being me. I'm Ken Coleman and she, Jade Warshaw.

We are here for you this hour. Are you ready to go, partner? I'm ready. We never told them the special surprise, Ken. Well, I kind of felt like you gave me the vibe like you didn't want to reveal that. Because it's a very personal kind of a thing. So I didn't know if you were picking up what I was laying down. Turning 30 is a big deal.

Okay. Just saying. Turning 30 years of age. If you're a big fan of Jade. Especially for the second time. And you should be. Tomorrow is Jade's birthday. And so I'm not going to be on with you tomorrow.

So I wanted to say happy birthday to you. We're so glad you're here. She's taking Ramsey Solutions by storm and just Stacey and I love her and Sam and they two beautiful kiddos and and they've just become a part of our community right away and so we're celebrating you tonight thanks some of us that's all I'm gonna say we're gonna keep the details on the download on the DL but happy birthday early birthday thank you Ken Coleman so all of you folks jump on the Instagram and the do but uh happy birthday early birthday thank you ken coleman so all of you folks jump on the instagram and wish her a happy birthday would you assure how much you love

her and i know she would appreciate that so i'm not going to tell you how old she is although i actually 30 ken okay that's what we're going with plus 10 okay ellie is up in lexington kentucky ellie how can we help? Hi. This will probably be a pretty quick question. My husband and I started back in November on the Total Money Makeover, and we've been able to pay off a lot of debt, so thank you, guys. Awesome.

So we will have all of our debt paid off by October, and we'll be able to save up a fully funded emergency fund by June for six months. Nice. So after that, we've already paused investing. So we could have our home paid off in two and a half to three years if we kept up the gazelle intensity. But we wouldn't be investing the 15% at that time. Would it be wise to only invest up to our company's match since it's going to be such a short time frame? Or should we jump in on the 15% right away? In your case, I'd walk it, in anybody's case, I'd walk it through as the steps say. And it's hard

because you can get excited. It's like, listen, if we just keep going with this intensity, we can have the house paid off. But there's a reason, you know, there's a fine line because obviously people call in all the time who are further along age wise than you. And, you know, we'll tell them to pause investing to pay off their debt. But then when it comes over to you, I'm like, no, don't pause. You know, you know, don't pause investing, do your investing and then pay off your house later. The reason for that is if it makes sense for you to take advantage of time in the compound interest equation, we want you to take advantage of time if it makes sense. And in your case, it does make sense because you've already paid off your debt. Like you said, you'll have your three to six months saved up. You've done everything right. There's no reason for you to continue to put this off and lose out on any time

gaining compound interest because the fact is you are still going to pay off your home and you're still going to be gaining equity and value in your home during that time. So really nothing is lost for you. There's a higher gain and there's a higher percentage of you earning more money if you go ahead and start investing now. Take advantage of that compound interest. And like you said, in a few short years, your home will still be paid off. Here's the thing. You might start making more money. You might have some other things that work in your favor that keep that timeline very similar without you even realizing it. I agree, Ellie. You're going to look back and go, I'm so glad I listened to Jade and got that three extra years or the two extra years of investing and getting that started.

Because you guys are going to crush this. There's a reason why years ago Dave put those steps in order. And it is about one word, Ellie, and that's momentum. And that leads to mo' money. You hear me? Momentum, mo' money. I love it. Momentum equals mo' money. Ken, you're a true genius. Ellie, are you hear me? Momentum Mo Money. I love it. Momentum equals Mo Money.

Ken, you're a true G. Ellie, are you with me? Yeah, awesome. Thank you, guys, and happy birthday, Jade. Thank you. Hey, happy birthday, Jade. I don't want to miss the fact that you just called me a, did you call me a real G? You're a real G.

I don't even know what that means, James. Momentum Mo Money. Come on, Ken. Come on. You've been sitting next to me too long. I grew up in the 90s. That's all it is. You only do I know who wears a white turtleneck.

Okay, first of all, it's not a turtleneck. It's a mock neck. Thank you. Thank you. It is. And it's actually a roll neck is the traditional usage of this. You go to jcrew.com. This is a roll neck sweater, not a mock, not a

turtleneck. Come on. get it right, I gotta fix it Alright, we can keep going Delise, as in release Is that right? Detroit, Michigan The Motor City Yes sir, happy birthday Jay Oh thank you Delise I mean I'm making your day

I feel like a new woman, this is great Alright Delise, release me from all this Please, help me out what's your question okay my question is should i sell my van or move into it whoa wait a second what are you serious about moving into this van what kind of van is it it better be a great van. It's a Class B. So I'm 60, and I'll be retiring in five to seven years. I'm selling my home, and I'm paying down off my car and my credit card, and it'll either be part of my van, but I'm upside down in the van. Okay, let's look at this.

Okay, let's look at this, because I want to see if I can get on the same page as you, and I might end up seeing it from a new viewpoint, which I think I might. Okay. Yeah, do you mind if we start with the house? How much do you plan on making on the house? I owe $170,000, and they say it's selling for $400,000. Okay. And after you sell, have you kind of done the math?

What do you think you'll walk away with? $190? Maybe. Okay. That was a good question. I wasn't ready for that one. Oh, that's okay. That's okay.

I was $107 on the van, $14 on the car, and $11 on the card. Okay. $14K, $11K. And I'm sorry, go back and tell me the van, 14 on the car, and 11 on the card. Okay. 14K, 11K. And I'm sorry, go back and tell me the van amount. 111? 108, basically. Okay. So put me in the know.

Tell me what a Class B van is. What does that mean? That is the higher cost van. Oh, they're just vans with the camper oh okay like it's a camper bed and everything yeah okay and it's going down in value because you said you're upside down I'm upside down it'll probably if it sells for 90 that'd be great but that means I don't you know 20,000 on it okay um $90,000, that'd be great. Okay. Do you have any money saved?

No. No money saved? I'm trying to get together for the retirement. My saving situation was basically with the house. I put $100,000 in when I bought it. Okay. What's the car worth that you owe $14,000 on? It's a 2019. It might be owe $14,000 on? It's a 2019

It might be worth $20,000 Okay We sell that today Something like $17,000, $18,000 I'm sorry We need to sell that today Yeah, I'd sell the car and I'd take that money And buy yourself a cash beater

We're going to hold you over Because I want to keep helping you with this Yeah, we've got some work to do But my goodness Okay You can get out of this But I don't think I don't know Delise, I don't think, I don't know.

Delise, I don't think you're going to end up in a van down by the river. That's our goal, but you've got to hang with us here. It's luxury. I bet it is. But still, it's a van. Oh my goodness. That's alright. Jade is on it. She's got her notes over there. She's warming

up. She's going to stretch during the break. You take a stretch as well. We're going to be right back. We're going to help Delise out and release her from living in the van. This is The Ramsey Show. Alright, welcome back to The Ramsey Show. I'm Ken Coleman. Jade Warshaw is with me.

Boy, I said that a little too quick. That's alright. And we're taking your calls, 888-825-5225. We took a call right before the break. Delisa's with us in Detroit. I want to set the call up if you're just kind of hanging in here or jumping in with us. The question she had was, should I sell my van? And she's got a really nice van. I'm talking, it's like a camper.

It's deluxe. But she owes a lot of money on it, about $108,000. So the question is, should she sell her house and move into the van? And she's got some equity in the house. So that's where we left it. Jade, pick us back up. We're walking through kind of her debt. We haven't gotten into income yet, so take it away and I'll jump in as well. Okay. So so delise uh we figured out we should probably sell this car it's you owe 14 000 but you might be able to get 20 000 for it so that gives you a spread that's a six thousand dollar spread am i right yes perfect so that gives

you some money that you could buy a car in cash no more, and you're good to go on that. Then you've got this credit card. Are you working at all still? Yes, I make $160. Hey, okay, Delise. That's just what we're going to need to release us from this. Sorry, Ken, I had to take your. I know, I'm sorry. It's the greatest name.

It is absolutely the best name of any caller I've ever taken. I'm not even kidding. It's fantastic. I'm obsessed. So here's what I love. Are you single? It's just you. Yes.

Okay. You've got a great income. You're going to pay off this $11,000 credit card like fast in a month, in a month and a half. Like this thing is gone, right? Because you make $160,000. What do you take home every month? $7,800. right because you make 160 000 what do you take home every month uh seven eight seven eight thousand dollars okay and you're paying your mortgage you've got this class b van you should be able to pay off that credit card in the next two months fair enough okay now hold on a second i'm detecting something here i could be wrong i hear you hear her it's

because she's not on a budget 100 and i don't think she knows that she can do that am i right delise that's right so i want to so listen my colleague she she's a force of nature i sniff it out but i'm going to jump in here and we got to slow this down and help you walk through what it's going to take. And she's right. It's a budget. Yeah. Do you have any idea month to month?

Are you just seeing yourself make it a paycheck to paycheck right now? Basically, yeah. Okay. So right now you don't see the margin. So you can't believe that you can pay off that debt as quickly as Jade's telling you. So I think we need to camp here for a minute. Budgeting. Like, what are your biggest expenses?

The van is $783 a month. Yeah. There's one. The house is $1,600 a month. Okay. So that gets us to about what? Because I'm downsizing. Yes, but...

That's about $2,400 there. Where's the rest of the money going? What do you think the big expenditures are? I know you've not done a budget. The car, the car is 300. I'm paying. I'm going to,

I was going to pay that off with the house selling. And then the car. We're not selling the house. Okay. So you're at 27. Listen, it's a budget because we're adding up these numbers and you're at half of your income.

I mean, you're at half of your income. So that money is going somewhere and it's going to your lifestyle. It's going to the things that you like to do with your friends and your income. So that money is going somewhere and it's going to your lifestyle. It's going to the things that you like to do with your friends and your family. I mean, it happens to the best of us. Listening to you guys is going to eating.

And so I'm starting to cut out that whole dinner thing. Okay, so when you get off the phone today, you're going to leave with every dollar. And I want you to have the premium version. At least we'll give you a trial version so you can see how it works. That is the foundation for all of this. If you don't get this budget on and popping and you can set it up in five minutes, it's super easy. And if you ever feel like you get hung up, there's every dollar YouTube channel that you can check out and it'll answer all your questions or slide into my DMs. I'll answer your

questions. But it's very easy, very intuitive. That is your homework for tonight. You get off this call, you download EveryDollar and you start setting up your budget tonight. And we do EveryDollar and we do, Delise, what's called a zero-based budget, which means that when you open up EveryDollar, you'll plug in what you get paid and how often you get paid. and it'll show it at the top of the screen in green like okay delise you got 78 you know 7800 to spend and then you literally quote unquote spend the money before the month begins so you go through on your budget and say okay i'm going to put 783 for the car and i'm going to put 1600 for the mortgage and i'm going to put 300 for my car and you go through and it'll subtract it from your income so you'll start to see what money you have to spend on bills and what you have left and what you have left is what we call margin and that margin is what you're going to use to pay off this credit card and I here's

what I know Delise when you sit down and do that budget tonight you will be shocked and amazed how much margin you had because there's certain things that you're going to guess on right you're going to say okay out to eat i don't know what i spent maybe i spent 400 maybe i spent and you're going to pull up that old you know bank statement whatever your bank is chase bank of america hopefully not you're going to pull up your bank statement and you're going to look for the past month and you're going to look at all the transactions that were out to eat and you're going to add them up and you're going to go oh my goodness so that were out to eat, and you're going to add them up, and you're going to go, oh, my goodness. So I got to ask, Delise, why the van?

Why'd you buy the van? And I'm not asking this for you to defend it. No, no, it's a great question. My mom died, and we had just gotten into COVID. My grandchildren and my daughter were living with me, and so I had to get away. So you just bought the van to say, I got to drive and get out on living with me and so I had to get away. So you just bought the van to say I got to drive and get out on the open road and heal? Yeah and I did 48 states so I mean you know. Okay so Jade's walked you the budget thing but the reason I asked that question is the way

you presented your question at the first was should I move into my van? Did I hear that right? Yeah. Yeah. Wait a second. You've got this house. I know, but you've got this amazing house, which becomes a tremendous investment. You've got a good amount of equity in this home. And to me, I'd be getting rid of the van and hold on to the house. Think about it, Delise, with what we just laid out in two months, because I think that you have probably a margin of $4,500 every month. In two months, you're going to pay off the credit card, two and a half months. And in another two and a half months, you're going to save up $10,000. And you're going to put that $10,000 with the Class B van and just set it aside.

And then you're going to save up another $10,000 and put it with the Class B van. And then you're going to sell it because you won't be upside down anymore. And then you're going to have your entire income to put towards paying off your house when the time comes. Okay, so you're going to now, like Ken ken said have an asset that's yours it's your house it already has equity now you're debt free you got to pay for a car in cash and this is going to happen in the course of less than six months and then here's the other thing delish you were talking about retirement you're doing what jade's talking about jade's got you on a path

to an emergency fund of three to six months of your expenses within how long what are you mapping out here i'm trying to keep up she's going to be out of debt in five months and then you're going to save up six months of expenses. And that's basic expenses, which you will be able to look at your budget and see, okay, what do I need to just kind of keep things running? Like what's my basic expenses? So you'll save up six months of that. That's going to take you another six months. So by the time you're 61, you're going to be completely debt-free, cash car, six months of expenses. Now you're 61, you're going to be completely debt-free, cash car, six months of expenses. Now you're 61 and you get to decide, am I going to keep working or not? If you decide, hey, you know, I got some more years left in me. I'm going to work till I'm 65. Social security starts at 62.

I want you to start taking those distributions from social security and I want you to start investing them along with 15% of your income. Very little retirement. Supposedly $60,000. Okay. All right. So the point is here is in about a year with the kind of income you're making, you're going to start pouring on top of that $60,000. You'd be surprised at how quickly that'll compound.

And if you can delay retirement until 70, then you're going to get a lot more of social security. And that gives yourself almost nine years to be piling up cash. At this point, you probably have the house paid off. Let's say that house now grows to $450,000 in value, $500,000 in value. I think you can make the case that by the time you're 70, 75, you're going to be in really, really good shape. But it starts now, the next six can make the case that by the time you're 70, 75, you're going to be in really, really good shape. But it starts now, the next six months, the next year. Yeah. Let me roll that out further for you because Ken said it. Once you get that six months saved up, you're investing 15% of your income every single month, every single month.

You're making extra payments on the mortgage every single month because you've got the margin to do that. When you get 62, you're still working. Take that social security for the next six or seven years. Invest it. This is how you do it. And you're going to be just fine. Give yourself another 10 years to lease. This thing looks totally different. Yes. And you're not living in a van by the river or by the campground. You get rid of it. That's a depreciating asset. Get rid of the van as quick as possible. Thanks for the call, Delise. We love you.

You're such a fun character. 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

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Jade Warshaw joins me this hour. 888-825-5225 is the number. You know, every once in a while, Jade, it's really fun because we do have a live studio audience. And I should take this moment to just say, if you ever want to join us, go to the website, ramsaysolutions.com. They've got a show calendar on there. And I should take this moment to just say, if you ever want to join us, go to the website, ramsaysolutions.com. They've got a show calendar on there. And we'd love to know that you're coming, but we give people free coffee and teas, and there's baked goods over there. And we just love for folks to come watch the show.

Well, Melissa joined us today in the lobby, and she's from Indianapolis, I'm told. And so every once in a while, we'll take a question from the audience in the lobby. And so Melissa is standing over there on the debt-free stage. Hello, Melissa. Hi, Jade. Hi, Ken. How are you? I'm good, thank you. All right. So I'm told you have a question for us, so take it away. What's going on? All right. I'm a physician and I'm board certified in family medicine, but I'm about to change specialties. I was accepted into a fellowship for hospice and palliative medicine. And it's a 12 month training program.

It starts July 1st. And I'm a single mom with five kids. Whoa. Yeah. How old are the kids? They're 16, 14, 12, 11, and six and 6 bless your heart so they're a lot of fun oh man okay so you're busy i am i am um but i after the fellowship obviously it would it would be good to relatively quickly uh get another job of some sort right um and uh so i need to

figure out what i want to do and the fellowship program and the hospital system that it's associated with, they offer something called an early incentive program. Basically, they would trade an extra stipend per month during the fellowship for my commitment to do whatever position in their company beyond the training program. And so if I were to take the stipend for, say, six months of the fellowship program, I'd be committing to six months in that position minimum. How much is the stipend going to be? It's like $2,000, $2,500 a month extra. Can you live off of that? So I get paid also for the fellowship itself. It's sort of like a residency program, right?

So that'll be somewhere between $60,000 and $80,000 for the 12 itself. It's sort of like a residency program, right? So that'll be somewhere between 60 and 80,000 for the 12 months. And then I also, I'm a health officer, so I help lead a great team in a health department in a small town. And so I make like 23,000 from that as well. So where's the problem? So I was just curious if I should go ahead and sign and commit to doing some position with them beyond the fellowship. Okay. Because I don't have to. That's an optional thing. Or I go on my own and over the next 16 months or so look for whatever position that I want of my own. Okay.

So I love the question let me ask it back to you okay okay and i love it by the way you're doing great yeah you're doing great um would you rather go out on your own or would you rather forget the stipend the stipend is a non-factor i appreciate you sharing i don't actually need that you don't need the money that you're fine uh the question is would you rather kind of step into their existing job in that program and kind of learn the ropes and kind of get into it and get your sea legs, or would you rather say, if I had the opportunity, just as I have the

job at the hospital, if I had my own opportunity or something else, which would I rather have? Where is your gut at? Yeah, I had my own opportunity or something else which would I rather have where is your gut at yeah I'd probably rather do my own thing just because I have more control and flexibility and all of that then that's the answer okay I'm trying to simplify it there's now I want you to push back here but based on what you shared with us so far the pros of it obviously you know the stipend but um know, some sort of guaranteed position, I guess, so that there's less unknown. All right, so let's play this out. Okay. All right, if you went out on your own and you get done with the fellowship, you're going to make 60 to 80 on that. You're making 23. You're already a doctor. Do you have any debt at all? What kind of financial shape are you in? No, I'm on Baby Step 7. You're on Baby Step 7? Yeah. All right, walk us through

Baby Step 7. What does your Baby Step 7 seven look like what kind of retirement do you have um so i'm actually i'm going through a divorce right now so it'll be about half of what it is now um and you know by the time the fellowship starts most likely but um what right now right now it's like 500,000 so it'll be you know maybe actually for my part I'll have the paid off house and like 100 to 200,000 I don't see any problems with this so yeah I'm okay I think financially I I feel like I'm doing pretty well because you're still going to keep the 23 uh with this community health thing yes I'll continue to do that yep yeah I'd bet on me the stipend is not worth it no not to lock yourself into six more months you should double the stipend so it would give you 4,500 if I'm if I was paying attention

yeah it just it's 2,000 or 2,500 extra per month and I think I don't know the okay whatever the 60 to 80,000 ends up being exactly you know divide over 12 months that's how much I'll make per month during the fellowship. But, I mean, obviously, I make more right now. I work only part-time, but I'm a hospitalist, so I take care of patients that are admitted to the hospital. And, you know, I make $200,000 with bonuses and everything, plus the $23,000. Way to go.

Come on, girl. And a single mom. That's what I'm talking about. What are your fears on this? Because I sense that there's something there still. I think the losing the flexibility because I want to see these five kids grow up. I want to be there to, you know, raise them, which is why I'm part-time right now. And so I need that flexibility.

I don't want to, I guess I don't want to give that up and lock myself into anything more. You know, this 12 months is already. Okay, let's stop. And you don't need to. She doesn't doesn't need to you don't let me yeah I think we need to pause right here because now this is this is what I'm getting at because I could still sense and feel that okay this is not a money question this is a time question so that would still be there this path is still going to be there once the six-year-old reaches a certain level the I mean I'm going through the teen thing right now your oldest is how old 16 and a half yeah I mean my oldest is about ready to graduate high school and I can't even talk about it

so I yeah she and I will finish our our programs now the same basically the same time what's it going to look like if you take the path that you're working for yourself time-wise you're not going to have the time that you have now yes no i i would hope that beyond the fellowship beyond the training program so this will be um july of 2025 that i could find something i could go part time oh you could in the new specialty or i could or i could do full-time but i could make it my own and just tell them, look, here's the schedule I need. Okay.

So now, Jade, that's a slam dunk for me. Yeah. And that's why you would never go work for the hospital. The hospital's not going to give you that kind of freedom. Yeah. I don't know. I don't know. I guess there's a lot of unknowns.

And I may end up doing something within this company because they do have some suburban, rural areas which are closer to home. Just, you know, if it happens to work out, then great. I don't, like I said, I don't necessarily need the stipend and have the absolute definite. That's what I'm going to do. But you want to do this. When the fellowship's done, I want to take kind of a month off, you know, I want to. And then in August that year, I want to move my daughter into college and things like that.

And I don't want to be, I guess I just don't want to be stuck. This direction of medicine is what's really on your heart. Yes. So then I'm going to tell you something, go do it. I think this is about mama time. And so whatever step you take going down this path must be run through the filter of how much flexibility I have for this short season because the kiddos are going to get old fast. So I think it's the mama time is what becomes her new toilter what do you think I just when you talked about receiving a stipend in exchange for six months in a role that you don't really know what it's going to be they could put you anywhere I just I don't see the benefit not with you not with the money that you're already making and that you'll make coming out i just i can't see where that's where that's

you're a working mom that's kind of what i was thinking i mean you you get this issue you're a working mom and then once you come out and you you do strike out on your own i didn't write it down but there's the other job that you have that you're making 23 000 off of that's eating up time you can let that go yeah well, well, I can do that. That's more of a consulting kind of position. Okay, so that doesn't require a ton of time. You're in charge of your time. Did you get what you wanted to hear?

Because I'm telling you the truth, what we think is the truth. I think you should absolutely do it. But I would strike out on my own path unless the hospital gives me the flexibility. Because the flexibility is the issue, not the financial issue. Right. Okay. All right, thanks so much. You're awesome. Thank you. Hey, I got to tell you, I love,

love, love seeing single moms, Jade. Just do stuff that just, I'm making life happen, taking care of the kiddos. Five kids. Five kiddos. My goodness. I'm exhausted right now, just thinking about what she has to do. And yet she's doing it with a smile on her face. Melissa, you're awesome. Thank you. i think you inspired a lot of ladies thanks for sharing that story all right hey we got to do a quick break but we're not done jade warshaw is my co-host i'm ken coleman and this is the randy show don't move welcome back to the ramsey show i'm ken cole Coleman. Jade Warshaw is with me this hour. 888-825-5225 is the number to jump in.

Our scripture of the day comes from Proverbs 25, 28. A man without self-control is like a city broken into and left without walls. And our quote today from the country music legend passed away. Today, I believe it was, is when it was reported. Toby Keith, who once said, don't compromise even if it hurts to be yourself. So if I had a Solo Cup, I would hold it up because he had some great songs.

Dream walking, pillow talking. Come on now. I love co-hosting with you. We need a music segment where it's kind of like name that tune. Something like that with Jade because she can sing anything. She can sing the phone book. How do you like me now? There she goes folks. Now that I'm on my way. Yeah. Wow. This is great. Toby Keith fans are getting a little soul in that. Y'all didn't know that I knew. I know about it. She knows. She knows. All right, let's go to Jessica in Orlando, Florida.

Jessica, how can we help? Hi. Happy birthday, Jade. There it is. Thank you, Jessica. We're going to celebrate Jade the entire month of February. It's going to be great. Exactly.

Month one. What's up? So I was calling because I kind of need some advice. Me and my husband just got married last year in September, working really hard on trying to be, you know, faithful in our money and keeping a budget. It's all kind of new. We have proper, I have land that I own, and I'm trying to build a house there. We are currently renting. And so I keep getting this pressure because we're both a little bit older. I'm 41, he's 38. And a lot of people are

saying, you know, we should really buy a house now. Well, it's not their life. Right. I know. And so I really want to build this house because I feel like it would be like the best financially and investing in our future. But I'm also like really worried because I don't know, accumulating the debt of building a house versus buying a house really scares me. Neither of us have ever like purchased or like our homeowners or anything like that. Sure. New foreign grounds. And do you already own the land? You already own the land? I already own the land. Yeah. What's it, what'd you pay for it or what's it worth? It's worth right now about a hundred thousand seventy to a hundred thousand based off of the taxes that I'm getting charged. But I actually purchased it from my parents for less than like $2,000.

Oh, wow. Okay. So it's worth $100,000. You bought it for $2,000. Correct. Okay. And what would it cost? I mean, have you done your research? What would it cost to build a home on it?

I mean, are you trying to spend $300,000? What are you trying to spend? So I've already gotten like a designer designer to build the blueprints and stuff and still working with different companies to do the construction papers and things like that. So we've been working on that, trying to do it slowly because we're trying to pay it off each time we do it, and it does cost money to get those

things done. But it's looking like the house that we are wanting to build can be anywhere between $300,000 to $400,000. A couple of years ago they were saying it was more towards like $500,000, $600,000 because of how crazy the cost of supplies were, but it's going down. That's gotten better, yeah. So you're renting right now. Do you have any other debt? I have my student loans that I've gotten down to about 7,000.

Okay. And I just have one credit card that's about 2,000 and that's basically it. What about your husband? Nope, he has no debt. We've got real hard to get rid of that. Very good. And what do you earn between the two of you?

So I make about $80,000 and he makes about $50,000 to $60,000. Okay. So here's the parameters that I would give you. I would first, and this is in order of priority, what you do first, second, third, fourth. First, I'm going to pay off this debt. Do you have any money saved? I didn't ask that. Sorry.

Do you have any money saved? Yes. How much? Yes, we have like the $1,000 emergency fund. Okay. And I have some like savings, like as a cushion in like a separate account. Um, it's like three or 4,000. And, and then I have like my, um, 401 and like, I have a couple of like stocks that I've like done as a child and haven't really ever touched it. So it's just like all sitting there.

So you've got the 401k. We're never touching that until it's time in retirement. What's in the stocks? I want to say it was like 40,000, I think. Okay, great. Honestly, sorry. I said, great. That's great. I would check it and just see what it's grown and look at it because I'm going to use it. So here's what I would do if I were in your shoes today, Jessica. I would take the $4,000 that I have saved aside from Baby Step 1, and I would pay off the credit card. And then I would take the other $2,000 and throw it at the student loan. And now you've only got a $5,000 student loan.

And then I would cash out these stocks and be prepared for the taxes because you're going to pay something on them. And I'm going to knock out the rest of that student loan. So now you're going to pay something on them. And I'm going to knock out the rest of that student loan. So now you're completely debt free and you have $30,000, let's say. And then I'm going to set that $30,000 aside and call that three to six months of expenses. And then from there, we're going to work and work and we're going to save up so that we can start this construction to permanent loan. And that's the type of loan that I'd want you to get on this because you want to make sure that the construction is funded and then that money rolls over into like a real mortgage. So you want to do it the right way. There's been times where I've seen people try to do it separate and do a construction loan first

and then turn around and try to turn it into a mortgage and they have issues and they end up having to close more than once and it's just more more expensive so try to look for a construction to permanent loan that does it all with one closing that's what i would do um and then the point the the the goal that you're looking for in spending on this build and on this mortgage is you don't want it to be any more than 25 percent of your take-home pay that's what we're getting. So you've got to make sure that you're really on this. You create a very clear budget. You know what you can spend. And that's what it is.

And they're only, you know, the plan is only spending what you can afford to spend on this house, building it. And so that's what you're looking for. 15-year fixed rate. Okay. I guess I have to calculate what that monthly bill would look like if for what we can

afford yeah and we've got a great uh mortgage calculator for that so if you go to ramsey solutions.com um and you know or type just google ramsey solutions mortgage calculator you'll find it and you can figure out okay like what does this look like you know what do i have to put up front in order to make this happen? And I think you guys are on your way. It might end up being 300,000 instead of 400,000. It just depends on how long you guys want to save. And I think this is a key point, Jessica. You have to determine a realistic timeline

based on the financial advice that Jay gave you because you're going to really, really regret it if you don't take that advice. The idea here is, is when can we build the house not if and i think you've got to change that narrative if is not the issue it's when you will be able to do it so if it's an extra year fine so one other thing i just want to point out is that there is this notion in America that renting is throwing money away. Have you ever heard that? Oh, yeah.

Yeah, but it's not. Let me tell you why it's not in your situation based on the context that Jay just gave you. It's not throwing money away. It's giving you options as opposed to being over leveraged with debt and stressed out. You started the call. I could feel the stress on you just thinking about the idea of building a home. So why wouldn't you take the option of renting, which is safety, no risk in renting? Do you see it that way now?

Yeah, absolutely. I think that there's just a lot of pressure. Like it was a little bit less when I wasn't married. Now that I'm married, there's a lot more pressure applied. Like when are you going to have children? When are you going to have a home? Let me address that. Okay. Cause we only got 30 seconds. I want you to choose today. You don't have to do it on this phone call, but I want you to choose today before you go to bed tonight. Which pressure do I want to deal with? Do I want to deal with the pressure of family and friends to do what they want me to do? Or do I want to deal with the pressure of bone crushing debt?

Those are two types of pressures. I'll take the pressure from family and friends, Jade, all day long. I don't want the pressure of debt that I can't handle. That's true. So it's a real clear choice. Great hour, Jade. Thanks for hanging out. As always, James Childs, our fearless leader and the merry men in the booth. Thank you for keeping us on the air. This is The Ramsey Show. I'll see you next time.