The Ramsey Show - App - Should You Make Your Kids Pay for Car Insurance? (Hour 3)

Episode Date: October 4, 2022

Ken Coleman & Rachel Cruze discuss: Making a 16-year-old pay for car insurance, Buying a house right now, Starting a business vs. buying a house, Getting a 30-year mortgage if you're planning on selling the house soon, Quitting school to become a full-time DJ. 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 Learn more about your ad choices. https://www.megaphone.fm/adchoices 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. It's where we talk about your life, specifically your money, your relationships, your work. We want to give you a clear path that has hope and practical steps that you can turn your life around in any of those areas. It is a free phone call, 888-825-5225.

That's 888-825-5225. I'm Ken Coleman, and Rachel Cruz joins me this hour. We are here for you. Let's go to Detroit, Michigan. Nicole is there. Nicole, how can we help? Hi, thank you for speaking with me today. You bet. So we have a 16-year-old daughter and she got her license in August this year and we did the day recommendation. We got her an inexpensive car and she paid for half and and that's all good so my question now is um michigan is sort of notoriously high for car insurance so we've got

that and then obviously repairs and gas and things like that so what is um your program's recommendation for how to sort of what to have her pay for, what we would pick up, things like that, as far as expenses. I don't think we really have a hard and fast rule, Nicole, with it. I think it's going to depend maybe kid by kid by you and your husband's financial situation. I think a lot of that kind of comes into play.

And the whole idea of matching the car, yeah, it's just a great idea for the kids to have skin in the game, saving up, having a big purchase that they're a part of, and that they probably end up taking care of that car better than if it was just handed to them. So all of that goes into play. But when it comes to actually maintaining it, the car insurance, I honestly see, Ken, you have teenagers, so I'll be curious what you think, but I think either path is okay. So there are some parents that are like,

nope, it's up to you. You gotta get a part-time job. You gotta handle these expenses. It's gonna be your responsibility. And I think there's a good in that, but I also don't think you're harming your kid if you don't do that. So for instance, Nicole, I'll say growing up, my parents, we had to pay for half of our car.

And they took care of all of what you said. They took care of the car insurance and the maintenance. And they opened up a checking account for us. And they gave us an amount of money. It was not a lot. They claim it's the amount of money that it takes for you for you to be to for you to live as a teenager month to month on all of your extra stuff right whether it's hanging out with friends or gas for your car all that and they put that dollar amount which i think they cut the number in half honestly

because it was not a lot in a checking account and we're not bitter at all no i still remember because we all had to get jobs that we couldn't live off of that that amount of money they gave us every month like you had to go babysit you had to work which i think was part of the motivation yeah uh so we had we were in charge of gas when we went out with friends uh school clothes like they had an expectation for us of here are the things that you have to pay for out of this account that will help fund some of it but you're responsible of managing that account you're not necessarily responsible for all the expenses and the financial side but you are responsible for managing it account. You're not necessarily responsible for all the expenses and the financial side, but you are responsible for managing it. And like I said, it wasn't a lot of

money. So if we wanted to hang out more with friends or go to more movies, whatever, we had to go work and make that money. So there was still a level of responsibility and learning about money as a 16, 17, 18 year old. But we weren't responsible for having to pay for all the insurance and all the maintenance. And so I would say, and that ends, which is the other side of the equation. I don't think we were damaged by it. Maybe some, maybe the American public would think otherwise.

I mean, I don't think you're damaged. I just think you're holding on to some bitter feelings you should probably talk with Dave about. I remember it was like 150 bucks a month and I was like, yes. Well, back then that was a lot of money for a kid. I don't think you appreciate how much money that is back then. No.

After I filled up my car, I remember all of it. And I remember thinking it was like the 17th of every month. And I'm like, I have no money. I have to go babysit this weekend to earn any kind of money. Wah, wah. So here's what we're going to do. I would agree with you, Nicole. We're going to pay car insurance and maintenance.

But I've told our kids, you're going to do. I would agree with you, Nicole. We're going to pay car insurance and maintenance, but I've told our kids you're paying your gas. Okay, so they're in charge of their gas. They're in charge of gas. And the reason is because... This is expensive inflationary times, Ken Coleman. Get a job, you know, or get your friend to pick you up. She does have a part-time job at a dog kennel. She does work.

Oh, no, no, no. I'm just talking about my... I'm just saying I would cover insurance'm just saying, I would cover insurance and maintenance, but I am going to make my kids cover their gas because number one, they need to learn

the cost of things like that and then, you know, you get to school, you get to work, anything outside of that, you know, you're paying gas. Period.

I mean, you can't, you don't have any gas, you got to go to work. And if you got to go somewhere in the meantime, you got a friend to come pick you up. That's where I'm going to draw a hard line. Good, you gotta go to work. And if you gotta go somewhere in the meantime, you got a friend to come pick you up. That's where I'm gonna draw a hard line. Good for you.

Pay for gas, for crying out loud. Okay, if your kids, if they wanna go out, do kids go to the movies these days? That was always like the thing we did. Yeah. They do, okay. So if they wanna go see a movie, what do they say? My kids?

Yeah, they come to you. They go, hey, I've been invited or I wanna go with a couple of my buddies to see it and that begins the conversation at which point you know it's like how do they get how do they pay for the movie um out of their out of their accounts they have to okay okay do y'all fund those accounts at all or it's strictly only the jobs that they have we're still doing the chores you do some basic things around the house we'll put a little money in there and there's the occasional,

if they're during a season of school or sports, so both my boys play football, so they can't do school and work and play football right now. They really can't. And so it's limited. So at that point...

Wah, wah. I mean, I guess it could work on a Saturday, but they're working out and everything. So we'll fund some of those things. But that is based on, again, the chores around the house. Sure.

And the room's got to be clean, you know? Yeah, and I think, too, we can get, like, very, we can't, because you and I are really healthy individuals. Thank you for pointing that out. Other people, I'm just kidding. Thank you. That's so true. We can get very legalistic about every, the little things, right?

Whether it's, like, they're going to pay for this. No, I'm not. The overarching idea though is, Meg Meeker always says it. I think it's a great quote. You're not just trying to raise good kids. You're trying to raise kids to become good adults.

Right. So what am I teaching my 16 year old? What does she or he need to know to be a successful adult later in life? So what are, and I think you can go about that all different ways. I think there's, I think there's a lot of different directions and angles. Pay for gas,

don't pay for gas. Give them some money and let them work. Don't give them any money, make them all work. Like, I mean, it's all of it, but you're just trying to raise an adult.

So it's like, here, let me, let me, that's the heart and the spirit behind it, Nicole. But you know, I'd say this,

if, if one of my kids was rocking it, you know, and they had a great business and they started with teens and they had it going and I saw how much money they're making, I'm going, okay, well, we're going to slide the insurance over your way now. I really would. I think it comes down to how much they're making and then they've got the responsibility. But I mean, I think that I really would. I think I would go, all right, you're killing it. You're crushing it. You're able to handle this. I would not start a business if I was a Coleman child.

I would be like, no. No, they would be killing it. I'm going to handle them. But they don't feel like you're kind of like punishing them. What, teaching them responsibility? Punishing the ones that are being successful. And then the one that's not doing a business, you're going to just pay their insurance? That's a fair point.

Okay. There we go. Look, it's real time. You got me on that one. I'm just saying, like, the more successful they are and that they're crushing it, they need more responsibility. Yes, how do you continue to magnify it? That's what I was getting at.

But you got me. You backed me into a corner. I don't know what's happening right now. I won the segment. Rachel won, Ken, zero. That's right. By the way, we are looking forward to some calls. If you're in a

dating relationship, and you're having some tension around the money, we are going to help you. We'll take those calls on top of everything else. She is Rachel Cruz. I'm Ken Coleman, and this is The Ramsey Show. the Rams this year. welcome back america you are listening to the ramsey show i I'm Ken Coleman, joined by Rachel Cruz, and we are here for you, taking your calls on money, life, work, relationships,

and we are really, really hoping that we get a few more relationship calls. We've had so many relationship calls on the show today. Yes. And so we've said, alright, if you're in a dating relationship, Rachel and I want to take on a little of the dating dynamics and money, because if you don't get that figured

out in dating, and then you try to figure it out in marriage it could be messy so we'll take some of those calls along with other things we'll see what happens but first we go to uh fort myers florida oh my goodness uh that's where hurricane ian just did so much destruction erica is on the line erica how can we help hi nice to talk to you both today. Good to talk to you. Are you right there in ground zero? We live pretty far inland from the beaches, so our home was spared, thank goodness. Oh, good.

But we have lots of friends that did not make it the same, so lots of homes that are destroyed, lots of cars. So we're just trying to pick up all the pieces and just be there for everybody that we can. Oh man, my goodness. I'm so glad you guys are okay. How can we help today? Thank you. So just a question regarding building a new home in this current economy. Over the summer, we sold our home. We did very well on it because we bought very low and kind of sold right at the time before things started to slow down a little bit. So we made almost $400,000 that we were able to pocket. So with that, we planned to build our

dream home. My husband is an architect and this has kind of always been our dream to move forward and do this. So we were, we're in a rental. We were totally planning to move forward with that. And then the interest rates started to go up and it just seems like the economy is just not really working with us very well right now. So we're just kind of scared. We are debt free. Like I said, we're in a rental. We have about $300,000 cash right now going into this project, but we're both just kind of nervous and not sure if we should do it right now. But then also knowing if we wait, things could just get worse. So just kind of looking for your opinion on that, just some wisdom. Yeah, absolutely. Well, you guys are in a unique situation, even with the hurricane. So tell me this, because I'm

not sure the answer to this question, but will builders, is there going to be, I would assume, a big influx of building because of the destruction that just happens. Is that correct? Yeah, I mean, it's definitely going to get busy. It's been really busy around here, you know, for the past several years. And then with COVID, you know, supplies are definitely on back order. So we had totally anticipated this taking longer than normal. Yeah. So, you know, we're prepared for that but the current destruction though like just again within this the last few days uh does that play a big factor in the economy there in florida um we aren't exactly sure i mean definitely our um our

beaches in our area bring a lot of money in during seasons so i'm not sure how that's going to look this year what's the price point well i'm saying i was saying for builders though like i'm just thinking if you're going to go good if guys are going to build is there like a big influx of builder i i'm saying all that to say because it's all around supply and demand i agree and the demand is high which it has been over the past few years um you know nationwide uh the demand has been high to build, but supply has been down. That's obviously what caused the prices to go up. And what we're seeing now is the demand has lowered

and the supply is actually kind of catching up. So my answer to you in general would be, I would feel good around spring to go ahead and start building around spring because we keep seeing with the supply and the numbers with lumber and everything, it's getting better and better and better. That's right. Lumber is actually back down. Yeah.

So you're going to be in a good position. I just didn't know how much of a hurricane that destroys a whole city, how much that will affect the housing market. I don't think anybody knows right now. Erica, what were you guys targeting as as to the price of this house that you would build um our current budget on it is about 850 000 um we think that we can do it for at that or less okay and you got are you planning to put 300k down we we are planning to put down more than that um since we are renting and we're debt free we're able to save um a ton of money right you have about 400 000 from your home correct that you sold right yeah

yeah but we paid off some debt we paid off the land that we own okay with that yeah so you got 300k cash and then you're going to put more so here i just want to take on what you asked which was uh the interest rates, economies. I wouldn't wait very long because I don't know that the interest rate situation is going to fluctuate a whole bunch. I mean, we're hearing in the news the last couple of days that the Fed is expected now. And again, nobody knows this, but the people that watch this are expecting the Fed to raise rates by another half point. Now, that's not directly tied to mortgage rates, but you don't know what mortgage rates are going to do. And so sitting around, sitting around, it's not like the

stock market, watching it like that. I think we're out of a period of those crazy low interest rates. I don't know how long it will be, or if ever we'll see stuff in the twos or threes again. So my point is, and you're such a strong cash position and you have no debt. I'm not disagreeing with Rachel in spring, but I'm going, if you guys have that big of a down payment and you guys are disciplined financially, I wouldn't just sit around and watch the mortgage rates. We just don't know what's going to happen. Anybody tells you any different is crazy. Right. So I would move forward. And that's what we've talked about, right? Yeah. But it's just, just you know there's so

many different factors being that my husband um designs homes for a living you know if if nobody is building homes anymore because interest rates have gone up you know what i mean so it's just we're kind of in that unique position of who knows what the next two years is going to hold yeah and that's going to be his income be the same oh i hear you be... Will his income be the same? Oh, I hear you. Yeah, yeah, yeah. Will his income be affected because of it? Yeah. Yeah. Well, yeah. I mean, where you guys are, though, I still would.

I would move forward. Maybe give it a few months just to save up some more money and let the supply catch up even more over the next few months and let the demand keep going down because you're just going to get better prices is what's going to end up happening. Right. And do you see any evidence that his job is in jeopardy do you see any signs or is this just you kind of worrying looking at the headlines um no not currently he he does very well for himself he just started his own company almost two years ago

um so he does very well. His income varies, but is somewhere around $250,000 to $300,000. That's awesome. So we're in a really great position. We just want to be as smart as we possibly can be because this has been our dream and we don't want to make a bad decision and then have to sell.

Yeah, no. You are too smart to do that, to make a bad decision. I think Rachel's advice is great. Yeah, Erica, if you called us and you're like we got four thousand dollars and three hundred thousand and student loans and all this right like we get some of those calls we're like you don't need to buy a house right now but erica you guys are in the part you're it i mean you've literally done exactly what we teach and at that point that's that's a little bit of the rule of thumb of don't look at what the

market's doing. Look at what you're doing. And are you guys in a position to do it? So if you wait a little bit longer, again, a few months, I think we're going to continue to see supply go back up. Demand's going to kind of continue to go back down. It's been a soft real estate market here for the last little bit. And I don't think it's going to pop back up anytime soon. So yeah, I would wait a few more months and then I would do it. I'd move forward. Thanks for the call. I do think you're going to see a lot of people.

Well, we'll see. But are people going to slow down buying homes as we come into the midterm elections to see what's going on? You know, are they watching what the Fed's going to do? It should be very interesting. But two, you know,

there are still a lot of homes available in the United States. If you just look at how many homes are still available, what a healthy supply is, there are a lot, but it's not as many as you would, they want to see in a healthy supply. So still there's some markets that are softening in prices, but overall, you know, it's not the big bubble that everybody said might happen. And that's a good sign. So it would be very interesting to see. But you're right. Builders aren't building at the rate that they need to be, that we would like to see.

So more builders building. But my heart's just heavy thinking about the pictures that we've seen the last week in Fort Myers. Beautiful coastal area and just flattened. And so glad that she and her family are okay. My goodness. Well, good hour. It's not a done hour. It's a good half hour, actually. See, I just lost track of time. You're about to leave the studio. We still have two more seconds to go, folks, which means you could still get in. This is The Ramsey Show. Welcome back, America.

You are joining the conversation here on The Ramsey Show. I'm Ken Coleman, joined by Rachel Cruz. 888-825-5225. 888-825-5225. 888-825-5225. Let's go to Logan in Oklahoma City, Oklahoma. Logan, how can we help? Hi. So my girlfriend and I, thank you for taking my call. Sure. My girlfriend and I are both in school and currently we are saving up to buy a house. We also, at the same time, are both wanting to start our own small businesses. And at the same time, we're trying to get married, or we want to get married, and we want to do all these different things.

And my question is, what should I prioritize on doing first, or should I multitask? No. You're trying to do too much. And I love it. You guys got big dreams. But, you know, there are seasons and you got too much going on. Rachel, I feel like the first thing we ought to be focused on is getting married. Yeah.

How old are you guys, Logan? We are both. She's 21 and I'm 20. Okay. Awesome. How long have you guys, Logan? We are both, she's 21 and I'm 20. Okay, awesome. How long have you guys been together? We've been together for three years. Okay, and so you're it? I mean, for each other?

It's a done deal? Oh, yeah. I like that. Logan knows. Hey, when were you thinking you were going to get married before you called with all three of these plates spinning? Honestly, out of all the three plates, I think the easiest one to do is to get married,

so that is on the back burner in my opinion or in my schedule. Why? Well, I feel like getting married, well, so what's easier, getting married or getting a house? Well, getting a house, you have to have money. Getting married, all you have to do is go down to the courthouse. Finishing school is a lot more difficult than, I think, saving up money for a house, in my opinion. I just think that it's a lot easier to to uh get married that's a very interesting logic i i would put it first on the list i mean you know that she's the

one you were certain about that are you guys in school yes how much longer do you guys have till you graduate she has about i think till december so just a couple months and i have about two years left okay uh what's she going to be doing after school job wise well our goal our goal is to her to start her own business that's an at-home daycare an at-home daycare okay yeah that's what we really want that's what she really wants okay um and is that is that feasible to cash for just her because you guys aren't married so for her that december is coming i mean that's in 90 days so in january does she have the money for insurance does she have an llc does she does she has she's been doing her work to open up a business does she have the money to

do that because that's a very expensive liability business that she's about to walk into. So is she prepared for all of that? Yeah, we have saved up a lot of money. No, not we, Logan. Wait, wait, wait. Hold on. You guys aren't married. So there's no we.

You have money. She has money. So how much has she saved up for her business? Okay. So she has around how much has she saved up for her business? Okay. So she has around $10,000 saved up. Okay. And I have around $15,000 saved up. Okay.

So together, I know it's presumptuous to talk before we are married about having things together. It is. And I understand that. Yeah. But yet you keep doing that. Okay. So we're going to keep it separate just for the fun of the conversation. You called us.

We're going to walk down this path. So she has $10,000. Does she have any debt? No. Neither of us have debt. So she does not have car loans, student loans, credit cards, nothing. Correct. And how much will it take for her to open up

a home daycare business in january around three thousand dollars really seems a little low logan for me for the insurance a lot of things okay okay so okay so what do y'all have well we have all the different furniture that she would need like the cots and the chairs and she already has inventory like uh different books um and a lot of the costs for the at-home daycare is like um the the fixed cost so i guess the variable cost you'd purchase on like a monthly basis like food um and the the insurance is expensive um but uh what would you call it does she get a business license and has she opened up an llc is she you know or is she going to be a freelancer is she

going to do a 1099 is she going to do a w-2 like does she have all of that worked out i have a question okay i'm sorry no no no no no you're great you're you're digging into no no and it goes in here doesn't this imply logan that she has a house to be able to do the said home-based daycare in, and you have no home? Yes. So where's the home at in this equation? Well, currently, and this is the main reason I called, currently we live inside of a rental property that my stepdad owns, rent-free.

Okay, but where would the daycare be in January? As Rachel was walking through this, where would the daycare be? In your dad's rental? Correct. Where's dad at in this whole equation? Because he owns the home. Well, the original idea for us moving into the rental is so that I could help him fix up the place

and so that we could save up money to buy our own home and that is what we've been doing thus far okay but since we're both almost done with school we both really want to start working towards starting our own business great that's the that's the best thing I've heard in this call is we want to work towards it. I'm going to try to squish your dreams, Logan. No. Okay, because here's the reality. Let me just paint you a picture, Logan. Let's just pretend for a second.

If we were in Rachel's world, let's pretend. I like this. She graduates in December. She goes and she's a full-time nanny somewhere. She gets the experience of working with a family or she works for a preschool somewhere where she doesn't have liability. So she is not attached to something long-term.

I'm getting a fist pump from Ken Coleman, just so you know, Logan. So she's doing it. She's making an income. She's working. You're working your way through school. You guys can get married. I'm not a fan of living together before marriage.

If you guys know that this is it. And I got married at 21. I was young. So, and it's been a wonderful 13 years with Winston Cruz. So, I'm fine with people getting married young. Some people have an issue with it. I don't. If you guys know that you're it.

So, I would have her graduate. Her start working. You guys together then get married next spring because or whenever right this is Rachel's world so let's pretend you get married in the spring plan a wedding between now uh four or five months you guys get married small wedding it's wonderful you guys move out of step dad's home to your own place and you rent an apartment for a little bit you guys get steady you finish school you guys are saving she's working you're working part-time you graduate in two years and then when we see where we're at because opening a business where

you you could it just adds a level of factors logan for you guys uh that i just don't think is wise starting out i don't think rushing into a home uh your first year of marriage is wise i don't think opening two businesses that you guys kind of think you know but you don't even have a place to do it is really wise i would really work on yourselves i sound like a therapist uh in your marriage and build a really solid foundation relationally and financially and then uh after you graduate you guys get your money together put a great down payment on a great starter home move into your house uh and then look to see from there okay what cash do we have to start one of these businesses because i know you have a business you want to start she has one

that she wants to start and and let me tell you and in three years logan life is going to look a whole lot different than it is right now so a lot's Rachel's world. I endorse Rachel's world. I'm living in Rachel's world. I'm the mayor and I like it. Okay, here's the deal. Logan, you guys have a great vision. You've got some mountaintops and I applaud you for that. You're young and that's a good thing.

You cannot climb a mountain overnight. This is a journey and I just want you to have some patience, and it's really hard to have patience. So in no way am I dampening where you're at, but my friend, there is a season for everything. Rachel just laid out a completely beautiful plan, and if you just are patient, you're going to be able to experience and live all of those dreams out.

I promise, because you're not in La La Land. You're a sharp young man. You'll look up at 26, and y'all will be freaking killing it. I mean, seriously, and that's still young. But yes, have the patience. Build a strong foundation under you guys, first and foremost, before you rush into anything. And here's the other thing.

You never know what's going to happen in the next three weeks, much less the next three years. And so you guys are going to get there. Hang on one step at a time, and you're going to get there. Great stuff. Rachel's World. You've got to get a t-shirt. We should.

Yeah. This is The Ramsey Show. I'm Ken Coleman, joined by Rachel Cruz. Thrilled to have you with us today. Our scripture of the day is Proverbs 12, 17. An honest witness tells the truth, but a false witness tells lies. Our quote of the day from Robin Williams, but in character, apparently. This is a twist. I saw that.

I thought, is that real? But it is. Did you ever see Mrs. Doubtfire? I owned it in a VHS tape. Oh, well, that's very nice. This is Mrs. Doubtfire as played by the incomparable Robin Williams. I admire that honesty, Natalie. That's a noble quality.

Never lose that, because it often disappears with age or entering politics. Well said, Mrs. Doubtfire. That's great. Ooh! I was trying to think of the little coo that he did as her voice. She did. What was the name Natalie

God that was such a good movie it was a great movie man I need to go back and rewatch that one again fantastic character Sally Fields man

yeah and who wouldn't do that what dad wouldn't do that to be close to his kids so there you go Natalie excuse me Natalie's in the character

Nick actually wow words and everything's hard for me in this last hour. I don't know what's going on. Nick is on the line in Grand Rapids, Michigan. Nick, how can we help? Hi, thank you for taking my call. I'm just calling.

I just got married three days ago. Oh! Congratulations. Please hold on a second. You're not calling us from the honeymoon, are you? No, I'm at work, and we didn't take a honeymoon. All right, very good. Very good.

Good for y'all. Well, anyway, so we are looking to buy a home. Right now we're both living at my parents', and we're looking to buy a home. And I guess we're kind of, or I'm more wondering why, if we're going to plan on selling it like in five years, why not just do a third year right now instead of 15? Why would you sell it in five? Well, I figure this would just be a starter home. I'm actually a carpenter, so I'd like to build my next home in a few years, obviously, like

I said, five, seven years, something like that. So I'd like to sell it, like kind of fix it up and then flip it almost. Okay. Well, my first piece of advice, Nick, you didn't ask for this, but if I were you guys, I wouldn't just rush into a home. I mean, you guys got married three days ago. So part of me would say, hey, for the next six, seven, eight months, I would move out of your parents and go rent somewhere, even if it's a-month lease at an apartment or something just to for you guys to have your own space build your own world uh something just happens when and i understand people moving back home to save money i mean people do it for lots of reasons

uh but there's just something to be said about having the dignity of you know when you open the refrigerator you guys got to decide who's going to go to the store to get food. You know what I mean? There's just these day-to-day decisions that I think are really important for a newlywed couple to walk through. That would be my first piece of advice is go rent somewhere. Then do you guys have any consumer debt?

Nope. We are completely debt-free. Awesome. Do you guys have some money saved? Yeah. We have combined $61,000 in the bank. Oh, amazing. Fantastic. Great job. So we use some of that, I guess, for your down payment. Yeah, we were looking at we just were doing the numbers yesterday. I think having $11,000 emergency fund, $5,000 left over for other stuff.

So I don't know what that is like. Yeah. $38,000 down payment. And then there's like closing costs and stuff like that. Yeah, for sure. OK, that's awesome, Nick. Well, well done on running your numbers. Yeah. So with a 30 year mortgage, like I understand some people say, well, we're going to just pay it like a 15 or we're going to pay more on it or we're in this timeframe. But, and for me personally, I would still go ahead and do the 15-year because you're going to be building equity within that, be paying more on the principal, and you're going to have more when you sell. And you never know what's going to happen. You know, you guys may be in there longer

than you even expect. So our rule of thumb always is a 15-year fixed rate with your payment being no more than 25% of your take-home pay. Right. And I guess the reason I'm asking this is I'd like to do 15, but with our income, we have about a 20% down payment for houses that we're looking at. And with our income, we aren't at that 25% with a 15-year. Well, okay. So then what house would you be able to get with it being in that 25 percent well that's like if we did a 30 year our payment would be like no i know i know yeah yeah but i'm just saying then at that point it ends up being just too much house because if we always again

we do the math in that formula of the 15 years so so if you're calling us we're going to always advise you that way uh so that would mean that you would just have to get get a different house okay that makes sense yeah okay probably not what you wanted to hear nick but that's what i would say and and again houses like they're um they're a big part of our world uh it's where it's a very personal purchase it's a personal part of our lives it's where you raise your uh it's where it's a very personal purchase it's a personal part of our lives it's where you raise your kids it's where you eat dinner it's where you have your first marriage fight at the kitchen table right like i mean like all this stuff your house is is a very um intimate part of your lives and so i just don't want it to take over nick and that's why we always

and we're i know i understand it's a conservative formula that we use, but it's the one where just, where your house doesn't have you and ends up being a burden. Yeah. And I think because you are, as a carpenter, want to build your own home one day, I would rent a little bit longer and I would rent that entire time. I really would to be saving money. Oh, and not even buy. I would not buy. I would wait, save up. You've proven that you saved. I think the goal here initially was, well, let me go buy a house, flip it, make some more money to fast forward everything. But again, I just think that brings in all kinds of risk. You never know what's going to happen.

And I agree with you. I'd sit tight. Actually, I would rent and save, save, save, save, save, and build the house that you want to build. Thank you for the call. Alex is up in San Bernardino, California. Alex, how can we help? Hi. Hi.

Hi. So my goal is to be a DJ. I'm 20 years old. I live with my parents. I'm currently going to college, and I just want to drop out. Do you think I should man up and finish college, or do you think I should get a job move

out and rent okay what would you drop out to do if you dropped out today what would be the plan uh i've worked at amazon for what purpose just to stop going to class yeah and just uh what are you pursuing right now what path are you on in college what major uh marketing and you have no desire to do that not really i'm not really into college or i get it for school so what's a full-time what's a full-time dj gonna make i i don't know i'm sorry that's a serious question what's that what's that possibility look like that's true i turned 21 soon so i'm gonna try to apply for clubs near my area but so you don't know i should look at that yeah okay so here's the point i don't we don't drop out of anything into nothing right so i i totally get that you're not into college believe me dude i don't have a degree

i couldn't stay in college either i i get it but to drop out to nothing just to go to amazon without knowing what the plan is let's say you do that okay you drop out you go work at amazon that's honorable you're making money whatever okay but you have no idea what a path to being a successful dj like. And then you look into it and you go, Oh, I, it's not as lucrative or as exciting as I thought it was once I actually dug in. So now what, what I'd rather you do is sit tight, have some discipline. Okay. And then what I would do is I'd start hanging out with guys that are DJs. I would start, you know, uh, if you got to work you know behind the

bar or something like that you know um just to get around djs you're not even 21 you probably can't even do that the point is you get in you get in close proximity to djs for real and really understand like what do you make what do you make on a weekend because there's a difference between a dj and a high-end club in south beach and the DJ in you know Sheboygan Wisconsin I mean it's just different are you want to DJ weddings I mean you got to know what you're dealing with it's true you got to know Alex listen if I were you I would I would stick out college okay I know it's it's it's a drag not just to stick it out. No, but when you graduate and you have a college degree, there is a marketable

sense that he will have if he wants to go into something else. If he wants to go into business one day or something, it's there. I think it's a I do, personally. My point is, figure out the future. Yeah, and I wouldn't just, I would not, I wouldn't drop out right now, Alex. Not right now. I want to know what a path to being a DJ

looks like. And if it's not successful, what else is out there? But stay put until you figure it out. Do you understand what I'm saying? Yeah, I understand. All right. There you go. Thanks for the call, Alex. I need to learn more about the DJ.

I was going to say, your knowledge, though, is sweeping. Well, I've been to some nice clubs down in Miami, and that's a whole different ballgame. They're flying these guys and gals over from Europe. I know these things. She is Rachel Cruz. I'm Ken Coleman. Hey, thanks to everybody in the booth. Thank you, America, for listening. This is The Ramsey Show. Hey, it's Rachel Cruz, co-host on The Ramsey Show. If you want to do your debt-free scream live on the show, visit ramsaysolutions.com slash debtfreescream.

We'd love for you to come to Nashville and tell Dave your story. That's ramsaysolutions.com slash debtfreescream.