The Ramsey Show - App - Slow and Steady Is the Best Way To Build Wealth

Episode Date: September 9, 2024

From the Ramsey Network, it's The Ramsey Show. I'm Jade Warshaw. Next to me is George Campbell, GK, and we are your hosts for this afternoon. This is a live show. We take calls about your life and your money, so if you want to call in, get in where you fit in. The number is 888-825-5225. We'll get you on the line. All right, George, you ready to do this?

I like to get in where you fit in. Get in where you fit in. I fit in a lot of places. So that's a good, I'm going to use that. That's good. You'll get into a lot of radio shows. Okay, let's go straight to the phone lines. Erin in Charlotte, North Carolina is on the line.

What's going on, Erin? Hey, guys. Thank you so much for taking my call. Sorry, I'm a little bit nervous. That's all right. We've got you. So me and my husband were in Baby Step 2, and we just received a small inheritance from his grandpa.

It was $19,000. Okay. And we are trying to decide. So we've had some marriage problems and we had found a while back this program online. It's a whole program. It's really intense. And I really think that they could help us.

However, it's $4,400, and that's for the whole program. And when you break it down, it equals about $150 a session, which is about what marriage counseling would be if we went per session. And we're trying to decide if we should do that or if that money should just go to our debt snowball. My thinking kind of is it's an investment in our marriage. And if our marriage is stronger, then, you know, we can, it'll just be better in the long run, obviously. You know, and then we'll, you know, just stronger partnership, you know, building our lives together. Have you done marriage counseling before? We have. Okay. But we just, you know, we haven't really found anyone in the area that we kind of

click with or just scheduling. These people, you know, we both felt like we clicked with, and it's Christian based. And it's just, you know, I really think it would be a good thing, but it's like, we got this, all this debt that's kind of looming in the bank. Are you guys, I mean, are you in a catastrophic situation? Like, are you guys barely holding on? I wouldn't, no, I wouldn't say that. I mean, right now, we're okay right now. There's just, there's a lot of underlying things that are still kind of there that I feel

like they definitely need to be worked out. I wouldn't say we're on the brink of divorce or anything like that. I mean, here's the thing. And George, George can try to chime in here. I'm when people put their marriage and their health first, I'm very rarely going to push back on that too hard because you're the one in there every day. Like you're calling into a radio show. I'm getting three minutes to talk to you. Only you know truly what your marriage needs and what point you're at. I don't know if a $4,400 investment is where you're at. You do though. This is a money show. So of course it's like, I'm, I'm wondering, I'm like, well, can they, can they get the work they need for 2000? Like, of course I'm thinking

about the numbers here, but ultimately I think that you and your husband are going to be the ones to really be able to sift through this. I mean, I'm going to start asking you questions now about your debt. I mean, how much debt do you have? Total is 96,000. Okay. 96,000. Okay, $96,000. Okay, so your thought was we can just, this inherited money, it's found money, we weren't counting on it anyway, we can pop in here and take the $4,400 and it'll almost be like it never happened because you weren't counting on that money anyway, right? Right. My thought is what if you took a step and you went hey we're going to do a once a month marriage counseling 150 bucks a session do that for a year that's still 1800 bucks and then once

you're out of debt or you want to continue that it's still going to be more affordable than using this lump sum right now which is going to hurt a lot more that's a big chunk of change it is and the truth is when i think of a marriage intensive, like I'm thinking of whenever I've heard it in context. So this is just me. Whenever I've heard it in context on some of the podcasts I listen to, it's like something catastrophic has happened. There's been a betrayal of trust on a major level.

There's something really heavy going on that needs deep work and deep health help for a long period of time and so or there's been something that's been wrong for a really long time and it's like this is our last ditch effort we're talking about divorce and so people dive into these intensives as kind of like a latch last ditch effort to save the marriage it didn't sound like that listening to you talk I'm going to be honest it didn't sound like that um but again only you know if it's like that and you're just not wanting to get into that on the radio so i'm with george i mean there was there was an infidelity um and you know for a long time it was like you know crisis mode um how long ago we have made um it's been a year uh so we have been working on and he you know i i trust him right now you know there's no but it's just i have a lot of these feelings that you know

keep coming up and you know if you guys have kids yeah we have a daughter i'm i'm doing it well i'm pushing my chips in i'm doing it i'm like you got kids this is a major thing it's not that old uh if it were me and the money came up and it was like I'd almost view it as a blessing I'd be like you know what well and that's what I thought too because I feel like if we ended up getting divorced that's probably going to cost a lot more than that well that's what Jade asked are we on the brink of that yeah It sounded like we're not, but there are some things to work through. So here's where I look at it. If you decide to do it, I would make sure it does not slow down your debt snowball. So we go, what are we willing to do if we use this amount of money to counseling? How do we not slow it down by that amount for

this many months? And then we go, all right, I'm going to take on that side job. I'm going to sell that thing that I really didn't want to sell so that it doesn't feel like they're competing. Yeah. I like George's take on that too. That way you're not losing ground, but there is a, you know, there's a hierarchy here and it's kind of, you know, everything we teach is, you know, go balls to the wall. Like we're going ham on everything. And that is true. Like when you're, when you have a money goal, you need to do all of that in order to accomplish it. But there is, there are these outliers that are equally important, George. Like when we talk about, for instance, when we say be gazelle intense, you know, everybody's looking around to cut areas and they're cutting their food budget. And next thing you know, they're eating ramen noodles every day. And I'm like, wait a minute,

wait a minute. We're not doing this at the expense of our physical health, right? There's you cut things out, but you don't go to the point where you're doing unhealthy habits in order to accomplish goals. Same thing in relationships. You know, you can go so crazy, work so hard that now you're like, okay, well, there is a relational component with your children and with your spouse. And you have to look at the timeline and go, is the timeline so long that it could have a relational effect? For my husband and I,

it was a seven and a half years of getting out of debt. So we had to weigh that into the equation so that we weren't seeing relational losses in what we were doing. And it's the same thing here with their marriage. If their marriage is on the rock, they had a catastrophic event. And so there's part of that that you do have to weigh in

because at the end of the day, there's more to life than money, right? You got to have your health. You got to have your relationships. You got to have your marriage, relationships with your kids. And so being able to weigh that in a very wise way and let it filter through your values as we're teaching this is really, really important. We probably don't talk enough about it. Your analogy of sort of like a car repair. I'm going, all right, this is the Louis Vuitton of marriage counseling. Can we get a Target bag right now? I don't know, George.

That can hold our stuff. And that's where I go a monthly session with someone local. Could that fill a gap right now and get them on the path versus going, we just heard about this thing. We need to do it. They were a great salesperson. We like them. I would just be doing a little more research into other programs. There's one called Marriage Helper.

They're friends of ours. No advertising, but it's a much more affordable option. That's good, George, because the truth is not everybody has $4,400 at their disposal. And it's not to say that there's no help for the people who couldn't afford something like that. So that is a very, very, very good. I'm just doing my research. I'm the kind of guy who does the research. Do your due diligence.

Find the help that you need. Don't sacrifice your relationships, your marriage or your health. This is The Ramsey Show. You're listening to The Ramsey Show. I'm Jade Warshaw. Next to me is George Camel. We just came out of a meeting talking about this very thing, the live like no one else cruise that is quickly approaching. And you need to know that the cabins are going super duper fast. We've had more than 90 know that the cabins are going super duper fast we've had more than 90 of the cabins booked so if you're even thinking about going you need to as they say i don't know if i can say it oh is it family friendly i was gonna say

well now i'm worried get off the ladder let me go that's a good one paint or get off the ladder i was gonna say the other one i try to just avoid painting. It's just easier for me. Yeah. James, do you know what I was going to say? Could I say it? Dave said it lots of times. Okay. You got to piss or get off the pot is what I'm trying to say.

Okay. You need to decide if you want to go on this cruise so that there's cabins left. You don't want to miss this chance to go on this cruise. It's paradise, guys. And did I mention you don't need a passport? That's the best part. Now, if you have a passport, I'd probably bring it, but you don't need to have one because we're starting in Fort Lauderdale, Florida, and we're ending in Fort Lauderdale, Florida, even though in between we're going to

really fun places like Turks and Caicos. I learned that's called a closed loop. A closed loop. That's right. Going to Turks and Caicos, St. Thomas, Puerto Rico, Bahamas. It's going to be fun. On board the ship, there are so many things you can do. You can relax, but you can also do fun stuff. There's excursions. All the food is included. Room service. You can lounge by the pools. A hot tub. Come on now. I won't be in that hot tub, but you can get in the hot tub. Have a good time. Stay active at the state-of-the-art fitness center. There's pickleball courts, which you will catch me on the pickleball court. Plus, you'll get to hang out with all the Ramsey personalities on board. George, you'll be there. I can't wait. I will be avoiding

the fitness center, though. So don't look for me. OK, so I won't be in the hot tub. Hot tub and George will not be in the gym. I might join the pickleball court. Yeah, you're you're good. George and I played pickleball last week and he he shocked me. I aim to impress. All right. So we'll have the entire cruise ship for seven days. Again, this is March 22nd through 29th of 2025. You do not want to miss this unforgettable vacation. All right. Very good. All right, George, you want to hit these phone lines? Let's do it. Where are we going? We're going to Springfield, Missouri. We're going to talk to Kyle. What's going on, Kylie? Hi there. I wanted to talk to you all about credit cards. This is George's freeway.

Tell me more, Kylie. Yeah, so I have never been in credit card debt. My husband and I have never been in credit card debt. We are really diligent and mindful about paying off our monthly payments. And cash in general, just having it on me gives me anxiety. And so I was just wondering, why are they still a bad thing? Well, number one, I would see a therapist about the anxiety related to holding cash. That freak you out to have $10 in your pocket?

Because we're not advocating that you have to use cash for everything in your life. We're saying use your own money on a debit card, for example, and you will spend less and hit your financial goals without any risk of ever going into debt or paying interest. Okay. Have you tried switching to a debit card to see what that feels like? No, because my husband is really adamant about getting his credit score up. Oh, okay. Okay. That's another convo. In my book, Breaking Free from Broke,

I break down the eight character archetypes. So you would be the perfect spender. You're the person who says, I pay it off every time in full, never paid a dime in interest. Your husband would be who I call the credit scorekeeper who's going, I got to get my credits. So why does he want to get his credit score up?

He just believes that it's a good thing and isn't fully on board with the Ramsey method just yet. But if you ask him, beyond, I think it's a good thing, because I think he's smarter than that, what would he actually say if you said, why do you want to hire a credit score? What does that do for you? Yeah, what do you want to use it for? Probably like getting a house loan one day. Okay. Okay. Now we're getting somewhere. So if we're saying I need a high credit score to get a house, we know for a fact that you don't need a credit score to buy a house. Now you don't want a bad score that will hurt you, but having no score won't hurt you. And so as far as that argument goes, you know, really what most people say is

I want a high credit score because I'll have more access to debt, if they're being honest. Does he know that? Know which part exactly? Does he know the part that you can do manual underwriting and that you don't have to have a credit score to get a home loan? That's just... He doesn't believe that, I think is the problem. But it's not Santa Claus. He doesn't get to choose to believe and have the faith. It's just a fact is you can do this. And so I could show him all the problem. But it's not Santa Claus. He doesn't get to choose to believe and have the faith. It's just a fact is you can do this. And so I could show him all the data. But again, at some point, he has to realize that he just is choosing to believe false things. And so that's on one side.

On the other side, using a credit card, like you're saying, is it bad to use it? It's not a moral issue to me. You can make a moral argument of who's actually paying for your rewards. Where is that money coming from? Because the credit card companies aren't a nonprofit. They're not charities. And so we can go down that route. But as far as the spending part goes, every single study shows that you spend more when you swipe a credit card. And I believe emphatically that if Kylie switched to a debit card for 30 days, she would spend less. And not

only less, she would spend so much less that it would negate any credit card rewards you could have gotten. And if you really think about it, I mean, going back to that, that kind of stuck with me when you said your husband just doesn't believe that you don't need a credit score. You have to think about what's informing. Think about what's informing what most of us know about credit and credit scores. It's banks and financial institutions, right? Those are the commercials we see on the TV. That's the ad in the magazine, right? That's the YouTube ad that you saw. And the truth is going into credit, card debt, and going into debt in order to upkeep a credit score makes a lot of people a lot of

money. And so if there's a couple of options, if there's a couple of ways to skin this cat here, one is you pay cash, one is manual underwriting, and one is you use your credit score and try to work real hard to have a high credit score, which one do you think people are gonna talk about the most? It doesn't mean that the other ways aren't feasible.

It just means that one is way more lucrative for a lot of companies, and the others, they have no skin in the game. So they have no reason to talk about the idea that you could do a zero score loan. So maybe frame it up to him like that. And maybe that'll cause him to kind of think about it in a different way. So then if we are never in credit card debt, though, I guess that's ultimately where my wondering comes from. But then why use it?

So what would then be your reasons for using it? You know, the points and the score and all this other thing. Okay. Let's talk about the – take one of your credit cards. What is the cash back number on everyday purchases? I don't know off the top of my head. So let's use an example of 2%, right? You get 2% back.

So if you spent $100,000, they would give you $2,000, right? Now, if you spent $100,000 on your other expenses that you can put on a credit card, I would say we can do better with a debit card. Would you agree? Yeah. So what if I could convince you that you could save 2% by using your debit card? You would spend more than 2% less if you used your own money versus someone else's money that you got to pay back later. Would you believe me? I could show you how within every dollar budget exactly how to shave off not just 2%, but 5% or 10% off of your spending.

And that's my big argument here is even if you are the perfect spender and you truly will never pay a dime in interest, the fact of the matter is your brain says this is not my money. It doesn't have the same weight as Kylie's bank account with money leaving right now. Because you know I got 30 days to figure this out, right? I mean, I kind of want to believe you, but I also want to know my own brain and I process, okay, I have this much in the bank. I know I can't spend more than this. Are you guys hitting all of your financial goals? Like, are you like, we are crushing it. We could not improve if we tried. I'm sure that's not the case. We're currently

in baby step two. Okay. So there's, there just tells me one thing and I think you can do better. Number one, I think you, you will get debt free faster if you cut up the card. You've removed all temptation to spend more than you make. Think about that. We are $0 in debit card debt. We are $1.2 trillion in credit card debt. And so to say that they're the same and that you spend money the same, it's a false equivalence because you simply cannot go into debt when you use your own money. It's kind of a funny, like, it's kind of a funny thing to think about, Kylie. I mean, I'm still thinking about it through the lens of marketing. And it's like, if no one, if no one, if you never saw a thing about the credit score on TV, on your phone,

on the internet, and you just went to the library cold and you said, all right, how do I handle my money? And there was an article about using your own money and saving up and having freedom and versus you have to borrow money so you can borrow more money so that you can borrow more money so that you can borrow more money and be in debt. It's like, it's insanity. It'd be book closed. Like,

Oh yeah, I already know what I'm doing. But because these marketing companies, they spend billions and billions of exactly how to market to Kylie. We fall for it. Like we fall for it because we're intended to fall for it. And it's very hard to get past it. When someone tells you the truth. This is The Ramsey Show. This show is sponsored by BetterHelp. All right. So I was born and raised in Texas,

and I love the myth of the lone cowboy. You know, the guy who doesn't need anyone or anything. It's a fun story and it's a lie. In our self-obsessed society, we're obsessed about our own diets, our own workout routines, our own jobs, our own social media feeds, everything. It's easy to forget that no one can do life alone. And I don't care if you're an introvert, an extrovert, or whatever you want to call yourself, we all have to have a community and a support system to do life with. It's time to shift the focus from doing it all by ourselves to knowing that we can only be Thank you. so it can fit with your schedule. To get started, just fill out a short online survey to get matched with a licensed therapist. And if it's not the right fit, you can switch therapists at any time for no extra cost.

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and create amazing relationships. That's what we're all about here. So let's go to the phone lines. We've got Olivia in Roanoke, Virginia. What's going on, Olivia? Hi. Hi. Yeah. So I called in just basically because I feel like I'm experiencing a lot of disagreement in my marriage as far as finances go. Tell us what happened. Well, we're both on the same page that we want to get out of debt. We both agree that we want to get out of debt. We want to have more money in our bank account and more security. I feel like I'm the one sort of leading with that like gazelle intensity. And right now I feel like one

of our roadblocks in front of us is my husband's car. We both have a car. I have a more reliable American made car that it's up there in the miles, but it's, you know, one of those ones that's meant to last. And then he has a 20 year old European car. And it's something that he got earlier this year after he wrecked his reliable car during a snowstorm. He paid in cash, which is great. We don't owe anything on our vehicles. But ever since he got that car, which I never wanted him to buy it, and I expressed that to him. But just let him do it because he was adamant and it was what he wanted. How much did he spend? It was a $3,000 car. Um, and I would say considering how much we've

spent, which I don't know exactly. He hasn't told me I can't access his receipts. He told me he doesn't, hasn't even been putting their receipts together with the rest of the cars. What does that mean? You can't access, do you guys in generation. What does that mean you can't access? Do you guys not share a bank account so you can't see? No, we do. We do. But like, I don't have a place where all of this stuff is just compiled.

Like all of the receipts on what he spent on car parts. He's very handy and he does a lot of the repairs himself. But he's probably done at least five or six repairs since he bought the car. Are these for fun repairs? Like, is he like souping it up or is he needing to keep this thing alive?

Okay. So you're also then, then something also tells me you guys aren't keeping a budget because you, if you were keeping a budget, you wouldn't need receipts. You would see the transactions coming through. Okay. He went to advanced auto parts.

He went to pet boys. He, you would see that come through. So is that right? There's no budget? As of right now, no. I have downloaded y'all's app before and tried to get that going. But our financial situation has not been great.

All the more reason to get into the budget. Okay, let's break this down. No, I agree. I agree. You're like, he's spending way too much money on this three thousand dollar car he's probably already spent more than three thousand dollars on the three thousand dollar car correct maybe not maybe not quite but we're in a position now where the car isn't working to where he's comfortable driving it even to work and so we're down to being a one car family and he works 40 minutes away. Okay. And you want to sell this car?

I want to sell it. And we literally can't even afford. It's like $300 in parts that he needs right now, and we can't even afford to buy that. Is it sellable? If you sell it, what would you get? Or is it just scrap? If we sold it right now, we would get pretty much nothing. But if he fixed it up, he might be able to get a similar price as what he bought it for.

I'm not 100% sure. So you're saying right now he would get $500, but if I put $300 in, I could get $3,000 for it. And you wouldn't get $3,000. You'd break even. You'd get the money back that you spent. We would technically wouldn't break even after everything he spent. Well, I don't even know. Why don't you guys do a little math on this?

Go back and do a little detective work. See what's been spent on this car, and then you guys can make the best decision, figure out what needs to be done, factor that in, and then figure this out. This is the smallest of the concerns in my mind, this car. This is not what's holding you guys back right now. It's just the ankle biter that's in front of your face.

So what's the real thing holding you back? Is he not willing to make other sacrifices? Yeah. So I would say stubbornness is what's really truly holding us back. I tried to discuss this car with him yesterday and it just turned into an argument. Let's say we never talk about the car again. What else are we doing? Because just not dealing with the car is not the thing that's going to get us out of debt. Yeah. So what are the steps you're taking? So I'm pretty much the only one doing anything to get out of debt. I have, I mean, I don't know. He works. What are you doing? What are you doing to get out of debt? Let's talk about you. Yeah. So I am working. I'm a full-time mom. So I work on

the weekends to clean for somebody. And I've been setting aside that cash for a little while. And I don't even have my thousand dollars yet because we keep running into things. And I keep having to work over my emergency fund because there's no money in our bank account. Let's halt right there. There's a couple of things that I hear that is really going to help. Number one, there's a lot of division here. There's I'm doing this. He's not doing that. This is my emergency fund. I don't have access to the receipts. Like there's a lot of division that I hear that lets me know there's something there's something missing here. So there's some marriage things going on where you guys are feeling separate from each other. You're not able to talk to him.

He's not able to hear you and probably vice versa. So I would want to do some detective work there and maybe get into some counseling to figure out what's the holdup there. Number two, I think the problem that you're running into financially with when you are setting aside money and it's getting eaten up,

it's you guys don't have a budget. So there's no way to know what's coming. There's no way to plan for it. So before you get off the line, George and I are going to get you hooked up with every dollar because George, I think that's really the issue here. Um, at least financially the issue. Well, tell us about your take home pay. What is the take home pay for the month with your cleaning on the weekends and working fulltime, what comes in? If I worked four weekends a month doing this one cleaning job that I'm doing, I would be bringing in, let me just pull my calculator up really quick. I've never actually done this math. This is exciting. This is great. This is part of it

for everybody listening, knowing these details. You got to know your numbers. You know your numbers, then you know what you need to do in order to get where you want to get. So in just four days out of the month, I would be bringing in $720. Okay, great. What does he bring home every month? That number, I don't even know. Okay, so like he has so many medical issues. No, but you know, you have access to the bank, right? What does the bank statement say was his income? Yeah, when you see his check roll through. Is it the same check every month?

No. The average I would say that we get, so like weekly, is between $300 and $500 a week. Okay, so maybe $2,000, like $2,000 a month. Why is he making so little? So part of it was they cut his hours back at work because business was slow. And then they recently brought his hours back up. And when that happened, he also got, uh, basically I, what I would call a raise. They allowed him to start receiving commission because he's an incredible worker. He's a hard worker. What does he do for work?

He's a chimney sweep. Um, but then he threw out his back pretty much right when that happened. He has had back issues his whole life and he probably needs surgery one day, but he's, he'll miss work because of stuff like that. Like this isn't just the first time it's happened where he throws his back out. It happens happens i would say once or twice a year where he misses a few days of work because of it and then there's like sickness and all those like normal life things that throw that i think he needs a new job yeah is it fair to say that he can't be a chimney sweep anymore i mean when you said once or twice a year for a couple of days at first i was like that's i mean you get a cold and you're out once or twice a year right the people in the audience are like yeah jade so there's part of me that's like how big of a deal is this like we're we're not losing weeks of work you know every couple of months it

doesn't sound like it sounds like it's a day here a day there I'm he needs to make more money I'm with you on that he needs to make more money you need to make more money you both need to earn more money um i agree with you there i think here's can i just be honest with you what i think olivia i think you're frustrated and rightfully so and sometimes when we get frustrated it's easier to look at the other person and go here's what they're not doing but i think this is both of you i think there's something that both of you i think there's more that both of you can be doing to make this better. Even something as simple as knowing the numbers, right? And in these types of situations, when you are married, here's the thing, you can't control what he does. You can control what you do. You can ask him and you can let your, you know, let him know, here's what I'd

like. But at the end of the day, Olivia can only control Olivia. So here's what you can do. You can get the every dollar budget. You can say, hey, let's do this together. And if he doesn't do it, you can still put the budget together. You can tell him, hey, for baby step one, I think we should save $1,000. And if he doesn't want to do it, you still save $1,000. Like Olivia can be on her game and lead by example until your husband starts to get on his game. This is The Ramsey Show. You know, one of the first things I discovered working in the financial world

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Give them a call at 800-356-4282. You're listening to The Ramsey Show. The Ramsey Show question of the day is brought to you by YREFI. YREFI refinances defaulted private student loans and builds a custom loan based on your ability to pay. Now, you guys, private student loans are different than federal student loans, right? Like Sally Mae. So learn more about this custom refinancing option and a lump sum payoff option you could qualify for after 24 months. Go to Yrefy.com slash Ramsey. That's the letter Y, R-E-F-Y.com slash Ramsey. This may not be available in all states. Today's question comes from Alyssa in Pennsylvania. Oh, nevermind. It's Courtney in Iowa. We had two.

I'm going to go with Courtney in Iowa. Yeah, go Courtney. Final answer. She asked, My ex-husband and I received a large inheritance during our marriage and set aside college money for both of our children. Now my ex is financially strapped and has asked our youngest son for his college fund, which he didn't end up needing to fund his education.

Our son is 24 and getting married soon, and I trust he will use the money responsibly. I can't believe my ex has put our youngest son into a terrible position. Is our son morally obligated to give his father this money? Short answer, I'm going to say no. There's no moral obligation. There's no legal obligation. No.

And I have questions, though. I mean, my first thought is, is okay the parents put the money aside for the kids in the 529 they list the child as the beneficiary unless there was a discussion that was like hey what if you don't use this money it goes back to us and they change the beneficiary back to themselves or the wife or whatever i I don't know. But if it's still in the son's name, I'd be like, this is my money. Or, I mean, he's about to get married. I can pass it to my kids.

How cool would it be to change the beneficiary to their kid? That's what I'm saying, yes. In a year or two or five or whoever. You know, I think that's, and part of this is we're enabling this ex's bad behavior for a grown man to just suddenly be financially strapped and need to rob his kid's college fund tells me a lot about the character of this person. Right. Because a 529 is a gift. Like, is you gifting the gift of education to your. Well, the confusing part is this came from

a large inheritance during their marriage that they then set aside in a college fund. Yeah. But still, even if they had worked to save the money you know it would still be money that they earmarked and said this is a gift to our kids for their education so in many ways it does feel like revoke like like turning around on a gift yeah i'm i don't like it yeah i don't like it and i don't like this ex having i think he needs to find a different method to get this money than to rob the college fund which which, by the way, will come with a whole bunch of penalties. You got to pay income taxes plus the 10% penalty on top of that. And so I'd hate to see that when this money's been growing tax free, it can be used for future generations to allow them to go to college debt free. And who knows what college is going to cost 18 or 20 years from now when this

son has kids. Yeah. And if you're, I mean, let's just pretend for a second. Let's play this out, George. Let's say how much money would need to have been in there to pay for kids college. Maybe, maybe there's $70,000 in there to pay for the whole thing. If he didn't use it, then this is idea of my ex is financially strapped.

Like you don't suddenly up in need 50 or $70,000. That's over time, many decisions being made. So yeah, my final answer is. This whole thing just gives me heartburn just looking at it. But I would say, no, your son is not morally obligated to give his father this money. And I wouldn't if I were him. And if I were the mom. So I can keep going on this.

And if I were the mom, So I can keep going on this. And if I were the mom, it was both of their inheritance. We don't know where this came from and all that. Well, she says my ex-husband and I received an inheritance. I'm like part of this is on her too. Like she should get to decide. And if she says no, this is our son's money. That on that.

You can figure it out. Thanks for the question. That's a real common core math problem. It hurt my brain. These are the hard topics that George and I go after on Thanks for the question. That's a real, that's like a common core math problem. It hurt my brain. These are the hard topics that George and I go after on The Ramsey Show. It's very hard hitting content.

It's what we do. All right, let's go to David in Providence, Rhode Island. What's going on, David? Oh, hello. Hello. How are you? Hi.

All right. I'm good. How are you? I like how Dave puts it. I'm better than I deserve. Okay. Love to hear it. How can we? I like how Dave puts it. I'm better than I deserve. Okay. Love to hear it. How can we help today?

So me and my wife are in an interesting financial choice right now. And I think it's kind of like a pivotal choice and I just need some advice. So we have no debt, no kids. Lord willing, we'd like to have kids in about five years. And then at that point, you know, we would go down to like a single income. You know, we just would both value her being a full-time mother. So we have about $40,000 to $45,000 saved up in the bank. Um, and we're currently renting an apartment right now. Um, our rent is, uh, 1575 a month, um, which is sort of average for the area that we live in.

Um, so our question, my, uh, my question rather is, um, do we buy a home that we can afford right now that would not really suit us when we have children, meaning we would probably have to sell it in about five years? Or do we continue to rent for another three to five years and then buy a house that would be bigger and maybe suit us more as a larger family? Why would you need to sell when you have one kid? That's what I was going to ask. Yeah, I mean, we really wouldn't need to sell for like the first kid. We kind of both would like to have more than just one, though. But yeah, I mean, like a one-year-old would be fine. But that stretches five years to like maybe seven years, no?

As far as space. Because an infant is like this big. Yeah, well, so maybe I should define the space a little better. I mean, they don't make one-bedroom homes. Well, the one we're looking at is 200,000 for not really a home, I guess. It's more like a cottage. It's 650 square feet. That's like a tiny home.

That's super small. Pretty small. Yeah. It's pretty small. Okay. That does change a little bit. That's tiny. So what if we got something more reasonable?

Let's say it's a two or three bedroom to where you could grow into it even with two kids, even if it was a little bit tight. What would that cost you? In this area, I mean, there's nothing. It would either need such a large amount of repair that it's, like, really a huge undertaking, like, more than just an average fixer-upper. So what about one in good condition?

You don't have to do some HDTV show. It would be probably about, like, $350 or so. Okay, that's reasonable. And you're going to350,000 or so. That's reasonable. And you're going to keep saving in down payment. Is $45,000 everything you have in savings? Does that include your emergency fund, or is this just earmarked for down payment? That's everything we have, yeah. Okay.

That does change it a little bit, too. And what's your household income? Yeah, so right now with both of us, it's about it's about 160 to 170,000 a year. But if, you know, after we have a kid and my wife would stop, you know, um, making an income, right. Then I would go down to about, I don't know, 110 or so. I mean, it depends on with me getting a raise between now and then and whatever, but it, you know, around 110. Okay. whatever, but around $110, something like that. I would say you're on the path and I would just set the home budget that makes sense and then go, okay, well, how much more down payment do we need to save up to make this affordable to where it's no more than 25% of our take-home pay? And I would base that take-home pay off of your income alone since you know that's the goal. Yeah. And the good thing is your rent is not astronomical. Your rent is not far out that I'd be like, you got to get out of

this rent. You're paying $3,000 a month for rent, right? You guys' rent is at a good spot. And I don't think that I'd be interested. I know it's not an actual tiny house, but I don't think I'd get into this tiny house deal. I think I'd ride the wave and just go, you know what? Instead of living five years in this 600 square foot house that basically is an apartment let's live in an apartment and let's save up this money and do this this 350 000 deal okay yeah yeah that's kind of what we were thinking about i i value the opinion thank you so much absolutely yeah for what it's worth our apartment is actually bigger than the house. It's nothing crazy, but it's bigger than that. It doesn't take much. You've got a 700 square foot apartment. You just beat the cottage. For sure. So I would go slow. There's no urgency or rush on this. And I

would just stack up as much as I can while you have two incomes and no kids. Now's the time. Yeah. And you might need to save up a hundred grand or 150 grand to make this payment affordable for your solo income in the future. But that's what I would do. I would aim for that 350 house and try to get there as soon as possible because Jade, like we know it's a moving target. Yeah, that's right. Three years from now, that might be a 450 house. That's right. So you still want to move with urgency, still move with intensity. And of course, we never want that payment to be more than 25% of your take-home pay all in. That's thinking about things like homeowners, all of it. So

that's the framework that we're working with. Hey, thanks for hanging out with us. That does it for this hour of the show. George and I will be right back with you before you know it. This is The Ramsey Show. From The Ramsey Network, it's The Ramsey Show. I'm Jade Warshaw.

Next to me is George Camel. We're gonna be your hosts for this hour. Give us a call. This show is all about your life and your money. And so if you're interested in building work, building wealth, if you're interested in doing more of the work you love or increasing your relationships, this is the show for you. You can call in. The number is 888-825-5225. We'll get you on the line. All right, let's get right into it. The first call comes from Stephen.

He's in San Jose, California. What's going on, Stephen? How you doing, Jade and George? Thank you for taking my call. I'm a huge fan. You bet. We're glad you're here. How can we help? So my question is, I've been married for about 18 years and we got in your plan back in 2018 and then we got out of debt. Unfortunately, from that time period, we had a separation due to my addiction to alcohol and everything kind of fell apart. We separated finances, everything. We remained married because in hopes, you know, kind of reconcile the marriage. Yeah.

I got myself clean. I'm over a year clean. Way to go. Yeah. I got myself clean. I'm over a year clean. Way to go. Yeah. Thank you very much. I appreciate it. It's been a very hard struggle, but I'm very happy and I'm glad to get myself back just for myself, you know?

Yeah. But in that unfortunate, in that time period, I accumulated, you know, some debt, about $50,000 worth of, you know, a car and consumer debt combined total. And we are still separated financially. And I know it's an emotional tie to this, but my goal is ultimately to get my family back, get my marriage back, get my finances back in order. And, you know, we did everything together. And now that it's been separated for the past couple of years, how and even is it possible that we get back on track? We get things together. Do I attack this debt by myself? And then, you know, I just I'm getting information and advice from different people. And I know you guys are the professionals and I trust you guys. And you got us at the first time. Well, I mean, there is part of this. Obviously, you guys separated your finances because of the addiction. And so I'm guessing you both were working with some sort of counselor who was recommending these boundaries, right?

Yes, absolutely. Okay. And so did they kind of give you a point where it's like, okay, once this takes, like do you have a lever that you pull where it's like once this takes place, everything goes and we have that trust that we keep the finances together? Or? Yeah, that's a funny thing because our counselor's advice is, hey, you guys do your thing and you do your thing separately. And maybe, you know, in the middle, you guys will meet down the road. And, you know, I don't feel the same way. And I kind of challenged that the last

counseling session because I feel like, hey, if we're going to be back on board, let's do all this together and let's get after it. Because that's how we did it prior. What's your wife think? I understand this is an emotional tie. It's a huge thing for my wife. It's a red flag for myself. It's embarrassing. It's shame, guilt, all of that, you know.

What's your wife feel? Is she ready to combine money again? No, I don't know, because even, you know, on top of that, with addiction, I had an injury at work. I'm a driver for, you know, a major delivery company, and, you know, my income was reduced because I'm not working and overtime, and so I think she wants to have a set, okay, the year of sobriety, that's great. Let's get, you know, let's just get that in order. And then financially, I think she wants me to be back working stable and bringing an income in order to get back on track and feel comfortable to join those finances again.

And I agree. I understand that, you know, but I'm like, I'm at that point of where I was with addiction, where I'm sick and tired of being sick and tired. And I want to get after this, you know? But there is a part of this where there was, you know, for her, I'm sick and tired of being sick and tired and I want to get after this you know but there is a part of this where there was you know for her I'm sure she experienced a huge uh distrust like there's part of this where it's like okay like you said I'm really glad this year has happened I think we're going to keep going in that direction but and and to your point I don't think this should be indefinite like I I don't think that you should live life separately.

But I do think you guys need to work together and figure out what that point is where, you know, you go, OK, once we've accomplished, we've checked these things off the list. Everybody feels comfortable again. We're going forward. We've got some track record established. Now we're ready to go together. I think you guys have to work together, even with a counselor, to kind of be a third party in that to make that happen. Because you're right. You don't want to continue to operate separately once you've gotten to that point of health where you don't need to operate separately. But to her point, yeah, she's got to feel good about this, too, because the truth is the past has been hard for both of you. you absolutely so you know i i think i've come to this this point where i've let emotion not play a factor because alcohol was fueled off of my emotion and you know i come from the crazy past but i i'm

trying to think more rational now and trying to but i'm also trying i'm like i want to get gazelle intense on this let's jump in like i'm all in board and i know she's like well let's pump the brakes and it's hard to stay focused and motivated when we were kind of living on separate islands. Yeah, but you can pour all that emotion into doing those things that she said she wanted to see you with a stable job, you with a stable income. And when you have those things, then you are also paying off debt as well. So there's part of this that I think she's probably wanting to see. Is this the real thing? And is it the real thing on every level or just part of the levels?

Absolutely. So I would do this on your own as you get the stable income. And then as you join and she goes, oh, wow, he's really changed. He's doing this thing. I'm on board. Then we combine incomes and we attack this debt together. I know you feel the guilt and shame from it. Is she willing to tackle it with you at that point? That conversation hasn't come up. She's aware of how much the debt

is and where I'm at. And I feel truly, we haven't even spoke about that, but I believe that she's not willing to put her hand in this because it's like, hey, this is your responsibility. You kind of fix it. And I, and I'm taking ownership and accountability of that. And I'm definitely... So are you guys splitting rent, like the mortgage right now? How is this all working?

Yeah. Well, that was a funny thing. Like we were all living together. We were doing all the separate, I mean, living together, I'm sorry. And then when the separation happened, she went to go live with her family and I went to go live with my family.

So the opportunity to, like I want to get this done like six months a year. You know,, I want to get this done, like, six months a year. You know, I really want to get intense and get this stuff back in order because we're in a position where we're living separate and we have that opportunity to kind of... You're still living separate? Yeah, you're still living separate. Yeah.

So what is the game plan to even move in together? See, the game plan is to obviously pay off debt. I want to be debt free to make before we make any moves because wait did she say i'm not moving back in with you until you're debt free um that that words have not come into in the play but i'm sure that's how she feels okay let's have sounds like you guys have more conversations to have because i do think that probably coming out of this she probably has a set of boundaries that she's thinking, I got to see X, Y, Z. And if she was on the line, she may have a whole different story and go, well, no, here's what you need to know.

And we go, oh, okay, okay. So it's hard to play judge and jury here. But I will say you need more clarity. And there needs to be a very clear conversation of what must be true. Because I want to spend my life with you physically, financially, everything. I want to move back in with you. I want to combine finances. And I understand I got work to do.

What needs to be done? Then we can go about the business. And I would think about selling that car, Stephen. Yeah, how much is the car out of the $50,000? The car is only about less than $10,000 worth. It's mostly consumer debt. You know, unfortunately, it's addiction brought to me where I... Credit cards?

Yeah, it's all credit cards. Yeah. And I took a leave from work medically because I just felt like I was in that headspace and I wasn't even getting paid at one point before I got medically kind of clear to kind of go

take care of this addiction. Okay. So it sounds like you're on the right path. It sounds like you're understanding. It's my mess. I need to clean it up. Have that clear conversation with her. Figure out, okay, what are the points that we move in together again? What are the points where we combine our money again? And are you really serious about getting back with me? Or are these parts caveats in order for that to happen. This is The Ramsey Show. through the bureaucracy. So if you feel like the system is working against you,

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This is The Ramsey Show. George Camel is my host. I'm Jadeade warshall we're taking your calls triple eight eight two five five two two five is the number to call hey george i saw this sitting on our desk and i think it's worth talking about because we hear so much doom and gloom about americans not ready to retire or it's the american dream is dying you know here in in America when it comes to money. And this is really cool from CNN. Number of 401k millionaire reaches new high. Yes. I actually just talked about this this morning on Good Day Orlando. We did a media hit with the nice people over there.

And this is exactly what we talked about because there's so much hope stealing going on out there. All you hear is there's a retirement crisis and the next president's going to screw this up and cause us to all be broke. And here's Fidelity saying, actually, we're at record highs and across our 401k accounts, they have half a million people who have balances of a million dollars or more in that one account. Wow. Wow. In just one 401k account, which is very encouraging. Average balance hit 1.6 million. That's great. That's excellent. So that's encouraging. So the question is good for them, George. What about me and my 401k? I don't have a million. Well, that's true. The average 401k out there is more like 126 grand. Yeah. Yeah. So it's like a 10th. So how do you get there, Jade? Well, it takes consistent investing over a long

period of time. So if you sporadically put 3% to get the employer match, yeah, it's going to take a bazillion years to get a million. But if you follow the Ramsey plan, you get out of debt as soon as you can, two years or less, you get the emergency fund in place, you begin investing 15% of your household income into that retirement account, you will see that it doesn't take long for compound growth to work its magic.

That's right. And all the time around here, we're talking about 10% returns. And anytime I talk about 10% returns, especially if it goes on social media, there's always somebody popping into the comments saying something like, well, where are you going to get that? Or how could you get that? Or that's impossible. And I always have to explain the idea that this is an annualized term. Number one, it's not to say that every single year you're going to get 10%, but over the lifetime of your investing, that is what you're getting. That's

the average of all the years you've been investing. So if it was up 30, down 12%, up 20%, down 6%, if you take into account all of those years, you're looking at 10 to 12% on average in the stock market. That's right. And when you look at them by year, most of the years are up years. You have those years that tank because something catastrophic has happened, whether in politics or, you know, international, but it always recovers and it always recovers really in our favor. I just looked at the S&P 500, which represents the total U.S. stock market. I looked at the numbers, Jade, this morning and in 2004, so 20 years ago, we have 5X'd since then. So if you had 10 grand, now you're talking 50 grand. And even if you started investing 10 years ago,

your money would have went 2.5X. That's right. And so it's not a rocket science analogy here. You just need savings rate, how much money you're putting in, plus time. That's the formula to become a 401k millionaire. Yeah, that's what we're looking at here. So your 401k is a great place to start. We say all the time, you know, sometimes here we talk about baby step four and we kind of push past it, but it's worth talking about, George, because a lot of people have questions. A lot of people don't realize, okay, when I invest in my 401k at work, what does that mean And where does that get me? So let's take a moment and kind of explain that because I posted a video on Instagram last week about baby step four, and I was overloaded with questions on, okay, what does that mean? Where do I go? What if it's Roth? What if I

get a match? So let's take a moment and teach the people when we say baby step four, what are we talking about? I'll start with the first part. So here we teach that you're not ready to invest until after you've paid off your debt, which is baby step two. And after you've invested three or, and after you've saved three to six months of expenses, that's baby step three. From there, we then teach, okay, now you take 15% of the gross that you're making every single month. This is before insurance comes out, before taxes comes out. You take that money and you're investing it. And we say, let's start with an employer sponsored account if there's a match. Yes. So if you make a hundred grand a year, you should see $15,000 in contributions in that retirement account. That's 15%. And the strategy here is simple. Match beats Roth beats traditional.

We go for the match first because it's a 100% return on our investment. I put in 4%, the employer puts in 4%. Great. Next, we can move to all of the Roth options available. All of that means is that the money is put in after tax and grows tax-free. So you're not going to be able to deduct it from your taxable income for the year like a traditional, but you never have to pay taxes again. If you have $2 million in a Roth 401k at retirement, Uncle Sam doesn't touch it. That's like 2 million of net income, take home pay. So I love that. Then beyond the Roth options, like a Roth IRA or Roth 401k, you can move to any traditional options you have.

That's right. And one of the other things I love about investing is if I can set it and forget it, like if you're doing the 401k right now and you can go to HR and set it up and it happens like clockwork, that's wonderful because you don't even have to think about it. It's just happening monthly. It's money. You can almost pretend like it's never happened, right? You're not thinking about it. And same thing if you have a Roth IRA, you could probably set it up to where that's coming out automatically to you on payday. Because here's the thing, if you don't do it on payday, good luck to you. It's not happening. It's not happening. If you don't do it on payday, good luck to you. It's not happening. It's not happening. If you see that money in your bank account,

it's hard to go, you know what I should do? Invest for the future. You're gonna go, ooh, I'm gonna buy me some stuff. Yeah, that's right. I love the idea of picturing like you never had that money and then future you. It's gonna feel like you found like a $20 bill in your coat pocket,

except it's gonna be like a $2 million bill in your coat pocket. So let's talk about George briefly because we got some time. Let's talk about for the people who say, well, I make too much to invest in a Roth IRA. Well, the IRA does have limits, but there's ways around it with the Roth where you can do a back door Roth. And all this means is you're going to use after-tax money to fund an IRA, and then you can immediately convert it to a Roth. And it's legal. It's a legal loophole. Totally legal. This is not like a life hack that's going to get you in trouble.

And I would recommend working with a pro on all of this. You can connect with one at ramsaysolutions.com to help. That's what I did when I came to Ramsey. I had an old 401k. I rolled it over to the IRA for my Apple career, my short one year and three month Apple career. I had some 401k money in there. That's great. So whether you're rolling over or you want to do a backdoor Roth, there's a lot of options for high income earners on top of that. There's the mega backdoor Roth. Yes. It feels like a seven year old named this.

The mega. Mega backdoor. And then for the people who are like, okay, Jade, George, great. I'm maxing out my 401k. I'm doing well. I'm maxing out a Roth IRA. What else can I do? We love the HSA, health savings account.

If you have a high deductible insurance plan, that's a great way to go. I mean, obviously, when you put the money in at first, you're thinking this is for my health savings. But beyond $1,000, you're able to invest that money. And by the time you turn 65, it doesn't have to just go to medical costs. You can use that for- It acts like a 401k. Basically.

Which is really cool. What if you're really doing well, George, and you're like, I did it all. I did the HSA, the Roth IRA, the 401k. What am I going to do next, George? I would just invest in a general investing brokerage account. This is not connected to retirement, and you don't get tax advantages. Well, let's run it back a little simpler because some people are going, when you say brokerage account, George, what do you mean? What is that? What is a brokerage account? What's a brokerage? Well, it's simply an account for investing that you work with,

you know, firm like you've, we've all heard of Vanguard or Fidelity or Schwab. So you can work with a pro in this. You can open these yourself and you just simply invest in, you know, this is what Dave does. He gets a big check that's not non-retirement. He goes, I'm going to put it in index fund inside of one of these accounts. It's not connected to your employer. It's not connected to your retirement. It's simply. And you pay taxes on the money, on the growth of that money, and you don't get any tax deductions when you put it in. So there's no tax benefit, but the benefit is you don't have to wait till 60 to tap into it. I like that. And you can use it for anything at any time. Okay. So let's take it a step further. When we talk about investing that money, what are we talking

about? We're talking about, because a lot of people go, oh, I'm investing in single stocks, Apple, Nvidia, right? And we're saying, no, no, no, that's super risky. Let's invest in mutual funds, right? So this is like betting on a single horse versus betting on the racetrack. Yeah. I'd rather just enjoy the game and go, we're all going to be winners if we put betting on the racetrack. I'd rather just enjoy the game and go, we're all going to be winners if we put money into the racetrack itself. We're going to get all the horses in that race. And that's what you're doing when you invest in a mutual fund, which is like 90 to 200 plus stocks. And so that's what you're betting on. And you can see the return is a lot less rocky than a single stock of one company. Instead, we're going,

here's the top 500 companies we're all rooting for, the top 500 horses in the race, and that way you get the benefit of all of that growth. And there's different types of funds that he's talking about. We talk about growth funds, growth and income funds, aggressive growth funds, international. Those are the four that we teach. You're spreading your eggs out.

You're not putting them in one basket. So if your international fund is not doing very well, probably your growth and income fund is trucking along and doing just fine as it should. And so that's how this works. That is baby step four in a nutshell. George, you're a genius. I wouldn't go that far. I would. But you know what? You don't have to be a genius investor to make money in the stock market. You just got to ride it out. Don't jump off the coaster, man. Stay put. Stay put. All right.

Keep tuning into The Ramsey Show to learn more about how to manage your personal finances. This is The Ramsey Show. George Camel is with me. I'm Jade Warshaw. We're taking your calls. This is a live show. So if you want to get on, go ahead and give us a call. 888-825-5225.

Let's go straight to the phone lines. We've got Dan in Los Angeles, California. What's going on, Dan? Hey, guys. How are you? Happy Monday. Happy Monday. How can we help? do when you're barely getting by each and every month. You're behind on pretty much all your bills. You're getting sued by a debt collector, all at the same time as you're trying to prepare for the birth of your first child. The short answer is make more money, but I know it's going to be more than that. So tell us what's going on. Yeah. So I guess past two years, I went into two different business ventures with partners that, long story short, I just ended up getting the short end of the stick and never got compensated. So since then, I've had to pretty much just drive for Uber and Lyft to supplement income.

Right now, we are one month behind on our rent. I am currently two months behind on my car. Utilities for gas and water and power, I have not paid for probably the past year. Wow. And it's still on? And it's still on, thankfully. Have on thankfully have you talked to them have they talked to you they've sent out like notices and i've made payments whenever i can just to keep things on um what are you paying for where even if you have a little income where is it going so i guess could i give you guys like

the breakdown of certain expenses yeah i want to know because those things should be covered first if you do nothing else put food on the table and cover your four walls and it sounds like you're not covering the four walls so i'm wondering where is the money going and by the way tell him the four walls real quick just so he knows that's food utilities housing transportation if you cover nothing else in that order which means the credit card companies can kick rocks because you got to feed your family and keep the lights on yeah what tell us more numbers how much is rent you're in los angeles rent yeah my portion is split with me and my partner and i pay about

1600 1600 just for you okay yep and then my car payment is 610 a month okay that's a lot insurance insurance is 330 a month okay in charging costs alone to charge my vehicle i drive a tesla oh no it's about 800 a month okay so stop there because we're already like, we're doing good. Now you're driving Uber and Lyft, which I don't know. I'm not stepping on anybody's toes, but I tend to think of those as side hustles. Now I do know in places like New York and where there's a lot of traffic, people do do this as their full-time job. So tell us what you're making from Uber and Lyft and what you're making each month. It's anywhere from like 42 to 46, roughly, give or take. 100?

Yes. Per month. Okay. And tell us where that's going. Okay, obviously half of it, a good portion of that's going to rent okay charging the tesla what else is laying around here because it seems like with that you can cover rent you can cover the car uh how are you why are you behind on rent and utility bills because you're even after what you just told us you still got about 2800 to go you gotta yes yeah. I guess phone and cable is $150 each, so that's $300 there. Groceries, I spend about roughly $300 to $400 on groceries. Phone and cable, why haven't we cut off the cable yet?

We're not paying utilities, but we're paying for cable? Yeah. off the cable yet we're not paying utilities but we're paying for cable yeah that's yeah that's also why i'm calling in just to like figure out kind of how to navigate all of this and tell me about this the partner situation um you guys are not married so therefore you have not combined finances yeah we have not combined finances we Yeah, we have not combined finances. We are very transparent with our finances. We know our incomes. We know how much we spend on certain things. How is she doing financially?

Because she has to live in this hellhole that you've created together. Yeah, we're both in literally the exact same position. Whatever extra change that I bring in, you know, I'm usually sending to her so that she can cover whatever bill she has. Vice versa, if I subtract the car, the charging, the insurance, the phone, the cable, the food, I still have $160 left. And I know that's no kind of margin, but I'm trying to understand why you haven't been paying rent when you had the money to pay rent and why you haven't been paying your car when you've had the money to pay the car. Yeah. What else is left out of the yeah when we fell off when we started getting behind on things it wasn't until afterwards that we were able to at least uh um be up to date with like current matters so you just you just don't have the money to get a month

to get you can pay for the month but you can't pay for the previous months exactly exactly what is keeping you guys in los angeles that's a good question um that is a good question is she working she is yep okay up until the pregnancy i'm sorry up until the pregnancy she'll be working yeah yeah and she gets like returningnity leave and all of that. Are her, okay, so you're doing Uber. You could do that anywhere. What she does, does she need to be in Los Angeles County to do it?

She doesn't have to be here, no. Okay, so. You guys need to get as far away from Los Angeles as possible. I know, that's right. We need to get your rent down. We need to cut every single bill that isn't necessary to your life. You need to sell both of these cars

and you need to get three more jobs. You want an answer on the way out of this? That's it. And if I had a baby on the way, I would be like, I want a different life for this baby

than the life I'm living right now. Are you there yet? No, we're definitely not there yet. I mean, what George is saying is exactly right. Are you there yet emotionally? Like we're definitely not there yet. I mean, what George is saying is exactly right. Are you there yet emotionally? Like, I'd be on the phone with Comcast or whoever has the cable today and go, I can't afford this. Cancel it now.

Cancel it three months ago. And I'd get on the phone with all the utility companies and say, please keep the lights on. I got a baby on the way. I'm working on catching up. I'd call every debtor in my life and say, here's where I'm at. Here's what I'm trying to do. And so far, I don't hear very much, I don't know, urgency toward the situation. I think this is a classic, like no one wanted to hold them and no one wanted to fold them.

Like, it sounds like you came out, you went to Los Angeles and you had this idea for this business. You got screwed. I don't know your partner what her thing was but it's almost like you're hanging on to something that you thought was going to happen it didn't happen and now you've got to rebuild something new and start again and uh you know what I'm saying that's that's exactly the situation yeah and so the good news the hard part about that is it sucked but the good news is you get to start fresh and do something completely new be completely successful and you don't have to be clinging to this you know past failure um any longer you can choose to let that go at any moment because i'm not staying in la eating beans and rice to drive uber i'm just like, if I'm you, I'm getting, I'm hightailing it out of there, right? Yeah. Are you going to move tomorrow? What's your, when's your lease up?

So we just, we actually just resigned for another 12 months. Yeah. It's also a situation where when it comes to renting apartments, your credit has to be in relatively good standing. That's true. Both of our yeah, both of our credits have been absolutely obliterated. But there are places that don't care about your credit, that they just want to see if you have cash money. There are places that care about your credit and then there's places that they're like, do you have first and last month's rent? Yes. OK. They might make you pay a little bit more up front. They may put different you know things into the contract but it's not what doesn't help is you got a missed payment now so we need to

fix that part asap we need to get up on the bills which means we got to work extra cut everything in your life that isn't necessary which right now is pretty much everything i'd sell the car and find a normal job and you can walk to it or bike to it you don't need to spend two grand a month on your Tesla to make four grand put a time limit on this this needs to happen in the next two to three months you guys need to be out of LA

and into something different and fresh and new and good sign up for a new life for that new baby we're rooting for you man this is the Ramsey Show. There's a time in your life and at the baby steps for renting, but you don't want to do it forever because when you rent, you're still paying for a mortgage just somebody else's.

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NMLS consumeraccess.org. Equal housing lender. 1749 Mallory Lane, Suite 100. RentWin, Tennessee 37027. All right, you're listening to The Ramsey Show. I'm Jade Warshaw. Next to me is best-selling author George Camel. And this is a live show. So if you want to call in, you can hit that number. But George, imagine this. And those of you listening, imagine this as well, not just George. Imagine you look up a year from today and you finally accomplish the things that really matter to you. The goals you said you were going to do, you were going to get out of debt, you were going to start that habit, you were going to do. You were going to get out of debt. You were going to start that habit. You were going to start whatever it was.

Imagine you actually did it and you achieved your goals. This doesn't just happen by chance. You got to have a plan. You need something that's going to keep you focused, something that's going to keep you motivated and organized every single step of the way. And lucky for you, we have that. We're excited to announce the new 2025 Ramsey Go planner it's here I know I feel like I needed a drum roll there it's packed with monthly teachings from Rachel Cruz Dr. John Deloney

and myself we're there to help you set attainable goals with your money guys with your faith your relationships plus it has so many amazing features we're going to help you get where you're trying to go we've got calendars and stickers and vision boards and goal setting systems and trackers for your savings and more. All of this is rolled into one convenient binder planner and it's $49. I mean, come on now. Don't wait. This planner is in high demand and it will sell out fast. It sells out every single year. So seriously, guys, if you've been on the fence again, get one. People are buying these like crazy. Go to RamseySolutions.com slash store, or you can click the link in the description if you're listening on YouTube or podcast. Get them while they're hot. All right, let's go to the

phone lines. Jennifer in Detroit, Michigan. What's going on, Jennifer? Hello. Okay. Is it okay to borrow for home repairs when we have lost our homeowner's insurance and we put down a large down payment on our home before we realized we immediately needed so much for the repair? Oh. Well, tell us more. I don't know what the down payment has to do with this but you bought this home i was on yeah you bought the home you had homeowners yeah um very briefly we lost it basically immediately because we bought a home with a flat roof and basically all of the homes with flat roofs are losing their homeowners insurance. Oh, gosh. All of a sudden. Yeah, because they have like some new technology where they can take satellite pictures. And even people who have roofs that are still under warranty

are fighting to keep their homeowners insurance. What's the, for those listening, if you have a flat roof, like what's the issue with that? Is it flooding? What happens? Leaks? Yeah, it's basically water pools on it. The drains get clogged. It just has a much lower life expectancy than a slope roof. And more risk

for the insurance company. Exactly. Okay. Have you had any claims or losses so far? No, we just bought the home two months ago. Okay. We knew that the roof needed to be replaced, but our plan was to replace it with another flat roof. And we have the money to do that, but considering everything that's happening with flat roofs, it seems unwise to lay out the money. Yeah, if I could choose a different roof, I would not go flat at this point. So what is it going to cost for a traditional roof? Okay, so here's the thing. Our long-term plan was that we wanted to add a second story to our home because we don't have quite enough space for our family, but we were going to manage with the space that we had.

And so we don't want to put on a sloped roof without putting on a second story because we want to put the sloped roof on top of the second story. And in order to do that is really expensive. It's like, I don't know. Is it worth sinking another 200 grand into this house versus just buying a different house when the time comes? So I'll say that for us it is because we're really, really location sensitive. And this location is exactly what we were looking for. Our family just moved internationally from Israel. Right.

And we just needed to make the transition. And there's no other homes in the neighborhood that have a second story and a sloped roof? Listen, Jennifer. Not really. I mean, we were just shopping for homes, and we bought the one that was the most reasonable. Yes, but the story has changed,

and I think you've got to be, you're very rigid on your on your plan it's like this was the plan this is the plan and i get that but there's there's a bad guy now like the story has changed and so you guys have to kind of be willing to change your story too like the original plan was we switch out this sloped roof for another or this flat roof for another flat roof. And then that buys us time. And then when it's time, we build the second story, that on that. But that's not that cannot be the story anymore. So the only way that that that you can still play that out is if you have the money to put on the second story and then get the traditional roof. And if you don't have the money to do that, then you have to rewrite the story. You have to rewrite the story you have to right but we

wouldn't be able we wouldn't be able to sell this house and buy a much larger house either maybe not immediately but what you never gave us the numbers so what do we do now you said you have the money for you said you have the money for a flat roof. What does that cost? And then tell us what the cost is for a traditional sloped roof. Okay. So to replace the flat roof would cost $25,000. Okay. And you have that? And we have that.

We actually have about $100,000. Okay. But in order to build a second story with a sloped roof on top would cost over $200,000. Right. But you don't have that money yet. Can I ask a stupid question? My hand's raised. Why not take that $100,000 and just upgrade and house? Yeah. Instead of overbuilding on your own house,

and now you're underwater because the money you put in is not even what it's worth. That's my worry for you. This is not the only house that exists for you guys. That's what we're trying to get at. What'd you buy the house for? $250,000. Are there any $350,000 homes that have sloped roofs and second stories? No, not really yet. There was, we would be, by- Jennifer, if I Google, if I go on Zillow, am I going to find a house for $350,000 with two stories and a slope roof within two miles of your house? No. No. No. It would be like four or five.

Okay. Let's call it four. Let's call it four. You save up another $50,000, you can upgrade, and you can avoid dropping $200,000 into a house that is not going to be worth $450,000 when you fix it up. I think it would be worth more than that. Then, wait a minute. Jennifer, what are your options? You tell us the options. Let's flip it, because we're telling you, and you're like, no, no, no, no, no. So, you tell us the options. Well, I mean, okay, the reason why I mentioned the down payment is because, from my perspective, we could have put down a much lower down payment and then we would have had that cash.

And so taking out a loan feels like it's the equivalent of just having put down a lower down payment. And so it doesn't feel like I'm being like anti-RAM thing. I got you. Okay. So you've kind of thought if we paint this the right way, we can feel good about taking out this debt in order to do this house. Yeah, basically, because it just, it would ultimately be the equivalent of just having put down. Why would you go into debt when you have a hundred grand? Are you saying go into debt? She wants the story. Yeah. She wants to add the addition. I think what I think you're doing, I think you're willing to add more risk and stress to your life in order to get exactly what you wanted.

And I'm just telling you, listen, variables came into play. And I hate that for you. I hate that this happened, but I truly do not think this is the only house out there for you. And I would not leverage my home and go into further debt in order to make this happen. And I get there shoulda, coulda, wouldas. I would be pissed if I were you. I'd be so frustrated, like, man, this is not the way this was supposed to go. And I'm

acknowledging that with you. But the truth is you don't have the money to pay for the way you want this to work right now. That's the truth. And I really think that if you would let go of your like Kung Fu grip on this, you might see that there's other options that serve you better well so i'll tell you that right now i really don't want to move for a completely non-financial reason i just moved a family of nine from we've lived in jerusalem for 15 years and i just moved a family of nine back to the states and i'm trying to get my children used to the neighborhood and making friends and like know, they're in a foreign country. Even more reason to not do an HGTV level renovation on the house right now.

And so here's what you can do on the insurance side. I want to answer the initial question before we got sidetracked. I would go to RamseySolutions.com slash home and get connected to an independent insurance broker. Because I've looked into your issue and there's lots of other companies that will cover you. It might be more expensive. You might need to look into an excess and surplus plan or an off-market insurance plan. There's also the Michigan Basic Property Insurance Association. Have your insurance broker apply for that, which should guarantee you some level of insurance. You can also look into the Fair Insurance, F-A-I-R, for options there. All right, guys,

that does it for this hour. If you want to keep watching and continue the show, head on into the Ramsey Network app. You can find it by Googling or going into the Apple Store and searching Ramsey Network. We've got Teresa coming up. Her husband doesn't believe that being debt free is a possibility.

Head into the app to see how that goes down. From the Ramsey Network, it's the Ramsey Show. I'm Jade Warshaw. Next to me is George Campbell, bestselling author and one of my favorite co-hosts, if I do say so myself. Means the world. Just one of. So there's other options. There's other options. I won't say who it is, though. All right. We're taking calls about your life and your money live from inside the Ramsey Network app. So give us a call. The number is 888-825-5225. Nothing changes here.

Let's go to the phone lines. George, Teresa, and St. John, Canada is here. Hey, Teresa. Hey, guys. What's up? Oh, well, I'm shocked I got through. You made it. Yeah, I did.

I did. I got to say, you guys give me hope every day. I hope. That means the world. I get so much right now. I don't even know where to begin to tell you. I bought my house in 1999 for $99,000. I owe $175,000 on it now. My husband's income, his wages have been garnished because we're so far behind in taxes that they're taking almost half of wages.

Now, that being said, I just cleared that up. Okay, so that's no longer happening. Well, it's still happening, but I've gone to the accountant. I've gotten everything cleared up. What does that mean, cleared up? Are the wages still being garnished? They are today, but in the next few weeks, it should be cleared up so that they're not. Okay.

What do you guys owe in taxes and back taxes? They owe us $6,000. They owe you $6,000? Yeah. But because my husband hadn't done it for so long, they just did basic math and said, you owe us this. And he just accepted it and wasn't getting it done and wasn't getting it done until finally I lost my mind and went and got everything done. So what, so what, okay, that's crazy that you guys went all this time, you just assumed the IRS was right. And so you let it get to the point that they were garnishing wages. You actually do a little bit of due diligence and find out you don't owe anything. They owe you $99,000 to $75,000. So at some point you took out $70,000 in HELOCs or home equity loans. Tell us what else.

Consolidation loan. Okay, so you put it on the house. Right. So we've taken out several over the last several years. Why? So now we're up just to get out of debt every time. Okay, but why? We are back. Hey, hey, I'm going deeper with you because there is a why. So now we're up just to get out of debt every time. But why?

We are bad. Hey, hey, I'm going deeper with you because there is a why. There's a reason that you keep going into debt, keep putting on the house, keep going into debt, keep putting on the house, not paying the tax bill. What's the issue at the underlying piece of this? Is it work? Who's not working? No, we both work. We bring in about $150,000 a year between us. We have another,

and I'll tell you about the house as well. It's a side-by-side duplex and I rent out the other side. So we bring in $10,000 income from that side. Okay. So that puts you at $160,000. That $10,000 should be $25,000, but my in-laws moved in next door several years ago, so they get a really good deal because I'm a really nice person. Well, that was your choice. It was my choice. It was needed at the time. So why is someone making $160,000 continually going into debt and not living on less than they make. What happened? So we're just behind in everything. There's a $20,000 credit card. We had to put a new roof on our house. Therefore, that was around $20,000 to get done. Have you guys ever had savings in the bank? Not really. Just always paycheck to paycheck your whole marriage? Pretty well, yeah.

What about a budget? We just go until we don't have money anymore. And then you get another lender to loan you another $20,000. Yeah, it's always the bank. It always just rolls back into itself. The mortgage is just always there, and it's just always kind of been like, oh, well, we'll just keep paying the mortgage basically until we die so how much how much is this amounted to you got you've got the 75 that you added to the home you've got the 20k credit card 20,000

on the roof what else is there um other than that uh i owe 6, thousand on my car okay anything else um that's really it the rest is just uh you know my power bill is in arrears my you know what this is i'm gonna just be honest with you this is you guys just you're like walking through life chewing bubble gum just walking through life y'all how do you160,000 and you can't cover your power bill? Yeah, no, I agree. I'm asking. I'm confused. Is it $300?

What does it cost? I'll tell you, the worst thing that we do, we eat a lot of, we go out to dinner a lot, we eat a lot of takeout. That's what I'm saying. So you'd rather have no electricity but get your takeout. No, 100%. So here's my thing is I've been watching your podcast, and I read the book. I'm doing the homework, and I'm trying to get there.

But I'm going to him, and I'm like, okay, listen, we've got to do this. And I've been doing it. Hey, I've been making supper at home every day for the last two months and trying to save up some money. Did you start a budget? You've been listening to us. Surely you heard about EveryDollar. Did you start the budget? I'm working on the budget.

No, that's the difference. Hold up. I'm holding you accountable. These things, there are certain things that we do that are a journey over time. You can do a budget in a night. Matter of fact, George and I set up a budget in five minutes the other day it's you can look at it matter of fact when you get off this phone go to youtube and and google it into youtube jade and george five minute budget ramsey show whatever and i want you to see how easy this is because i see a lot of

action like i see a lot of uh circling the drain on this it's like this i'm i'm learning about it i'm researching it but you're not actually doing the action and i want i want you to actually walk away from this call and go you know what i can do this like i can log in and i'm going to dedicate 20 minutes and i am going to set up that budget tonight write it on your to-do list and you'll feel so good when you put the little green check next to it and then then from there, that, because here's the thing, Teresa and George will attest, if you don't have that budget in line, none of this happens. But then there's the other part of that, that I really want to make sure, you know, no one can make you stick to the budget, but you, the budget is not, it's not magical. It can, it can do a lot for you, but you have to decide to stick to the numbers. And I'm not going to lie.

I'm a little worried about you guys because you've just been lollygagging through this. And it might take you really hitting a hard time for you to go, oh, I have to get my act together. And I don't want you to. I would hate for you to lose your house. I would hate for you to get behind on your mortgage just because you'd rather order takeout. Teresa, you need to come to Jesus with your husband tonight. free to get behind on your mortgage just because you'd rather order takeout. No, I agree. You need to come to Jesus with your husband tonight. It sounds like he's not really willing to make many sacrifices.

So on the tax thing, like the Canada revenue, they owe us six grand. So we know that. I have to pay the accountant three out of that six. That's fine. That's fine. That's fine. But that's... You need to tell him we are done borrowing money. We're not eating out.

We're going to cover food, utilities, shelter, transportation. Everything else is gone. I don't want to die broke. We make too much money to live this way. Yeah. That's it. End of sentence. No excuses.

Don't derail into some tax... Nope. We're talking about getting out of debt once and for all. Yeah, you should be out of debt. You got $46,000 of consumer debt. You're out this year living on less. And then you pay off the mortgage like everybody else. This is the Ramsey show. We help you with your life and your money, but spoiler alert, it's not magic. There's not a magic trick here. We don't pull thousands of dollars out of a black hat, right?

You actually have to get out there. You have to do the work. It's not a game show. Right. You don't just, we don't, it's not the voice. We don't turn our chairs around and then there's a pile of money waiting for

you. And it's not an echo chamber. So if you call in trying to justify your stupidity, I cannot sign off on that. I don't co-sign stupidity. Can't do it. This is an advice driven show. You call in, you ask about your scenario. We give you advice. You get to decide because you're grown if you're going to take it or not. But at the end of the day, trust and believe everything that we suggest for you is going to require work. It's going to require you to get uncomfortable. It's going to require you probably to embrace a methodology that you were not currently embracing. Because if you were, you probably wouldn't be calling into the show. Right, George? That's true. All right. Word off of my soapbox.

Can you tell I get a little frustrated sometimes? You're tall enough as it is. Why do you get to get up on a box? I got to get up on a box. Make us look even shorter. Let's go to Payson in Manchester, Vermont. What's going on, Payson? You there? Hi, Jaden, George. Hey.

Yes, I'm here. Hey. Thank you for taking my call. You're welcome. I'm sorry I had to get steamy there in the beginning. It wasn't directed towards you. That's okay. Hey, so my question today is, I have some,

my mom took out some parent plus loans for me to go to school. Okay. And since then, she's also taken out some for my brother and the loan's been consolidated. So all of the loan is together. Oh.

And so that's the last portion of our debt. And I'm not sure how to pay that off with it consolidated the way that it is. What was the balance before she consolidated for your side? So I believe it was around $30,000. Okay. I would go off of the balance before it went into consolidation. Is that fair? So it is fair. So right now I'm making minimum payments. If I wanted to go above and beyond and make payments above what's due, I just don't want to end up paying for my brother's loan, I guess.

Is he paying for his loan? I'm not sure if he is or if my mom is. What was the onus for all of this did you say hey mom these were really for me I want to pay or did she say hey I really need you to pay or you agreed to pay what was the conversation like yeah so the conversation was um I would that I would pay off the loans if she was able to to get that get them for me yeah and when you log in i mean because if you're paying them you should be able to log in and see the full amount oh is it divided is it just one loan with one account number or can you see that there are two loans but maybe there's just one payment for

both loans yeah there used it used to be broken down with all the different loan pieces, but since she consolidated, it's all just one lump sum. And how much is it now? Right now it's $48,500 and change. Okay, so what I would do is I'd probably get with the brother and I'd say, here's a deal. $30,000 of this is mine and $18,000 is yours. And I'm going to make the payment until this balance gets to 18,000. And I'm not paying another dime after that. And I just make it super clear that this portion is mine and I'm going to make on-time payments.

And if you want to, you know, if you're going to make payments too, like let's figure out what that's going to be because you're both attacking the same principle in the same interest rate. So there's part of this where you guys need to start keeping track of what I've paid versus what you've paid. And I don't know where he's at in his career, but if he's not ready to start paying his portion of the loan yet, fine. You're making the payment. You're making extra payments. But just as long as he knows when this bad boy gets to 18K, I'm screenshotting it. I'm keeping a record for life.

And I'm telling you, I'm not making another payment after this. And it's not in your name. So whether or not anybody wants to believe you, you're fine. You're free and clear. It's really your mom. Mom is still on the hook. If brother says I'm not paying, it's on the line for her. Does she understand that?

Yeah, she does. Do you think it would be unwise to take out a separate loan to pay off my portion of the balance and then just pay down that loan? Well, what was the reason she consolidated? Was it for lower interest rate? To lower the monthly payment, I think. Is the interest rate the same, lower, worse? I wish I knew. I don't know. I mean, if you got a lower interest rate the same, lower, worse? I wish I knew. I don't know. I mean, if you got a lower interest rate loan and did that, I wouldn't necessarily be mad at that simply because your brother being on this

does add a layer of complexity, especially if he's actively making payments as well. So if you were just like, listen, I'm swapping one for another, and that way it's in my name, it's on my time, I got it. I'm not mad at that. But there's a reason you couldn't get the student loan in the first place. Could you do now with your income? Is that the deal?

No, I think I could at this point. What do you make a year? Right now, our combined income, my wife and I, we make $67,000 roughly. Okay. And that's both of you working full-time? Correct. And this is your only debt? This is not the only debt. We're currently paying off another student loan that I have. Okay. Is it more or less? It's less. Actually, we're about to finish my first one, which only has $600 left on it, and then we've got a federal one for $22,000, and then this bigger one for $30,000. What was your degree in?

Christian Ministries, but I didn't actually finish school. Oh, man. What are you doing now for work? I'm a youth pastor. Okay. So you didn't even need the degree. Would you look at that? I know. Hindsight's 2020, yeah. Well, I would try to get your income as high as possible, and that might mean side work for now, because 67 household is below the average household income in America, and I want you guys to get rid of this. You got 53 grand to pay off, right? Yeah. Yeah. Does she have any debt, your wife? No. Okay. And no credit card debt,

no car loan, no credit, nothing else? No, we actually paid off a car earlier this year. Awesome. We're attacking debt. We're doing good, I think. Is she working? Yeah, she's the office manager at the church as well. Okay. Is there any, yeah, I mean, at this point, the name of the game is getting up the income, taking on as many jobs as you can to knock this thing out because I think that it's going to, the longer it sticks around, the more it's going to cause headache and wait, what was your portion? What did it start at?

Is your brother making payments? I think that that is just, I mean, it's making me tired just thinking about it. Yeah, yeah. And I would talk to mom. I i would do my homework i'd figure out the interest rate i would know the numbers inside and out and have an agreement maybe even on paper with brother and mom going we all agreed on this definitely on paper and every time i make listen every time i make a payment i'm printing out that pain that paper that says what you paid i'm sticking it in a file so that we can always see hey what you paid i'm sticking it in a file so that we can always see hey when i started here's what it was here's what i got it to and

i tell your brother to do the same thing because i might even go i'm gonna do 30 000 in payments instead of getting the balance 18 because with interest that thing's gonna keep climbing his brother doesn't pay that's a fact well if so he's got to pay his portion plus his interest yeah if what he's paying since there's one interest rate if what he's if he's the only one paying and he's satisfying obviously the interest rate and making extra payments on the principal i feel like because if brother's not paying that 18.5 wouldn't be 18.5 that's also true it would be more like 20 21 that's also true i don't know how long it's going to take there's a lot of variables here again it's like common core math That's why part of me would do the loan. It's so messy.

I'd probably do the loan. If he can get a comparable or better interest rate, I'd be like, give me a loan for $30,000. I'm out. I'm going to just drop that and move on. And that way it's in your name. You don't have to be thinking about your brother, your mom. Gosh, I hate Parent PLUS loans.

The worst. It's awkward. It hurts relationships. It hurts families. And this is one It hurts relationships. It hurts families. And this is one very clear reason. Yeah. Yeah. And the other thing is on the income side, I would see if wife, if she's an office manager at the church, that's a skill set that can transfer into the private sector. And pay more. And she could be an executive assistant, who knows, making more than 67 on her own. Yeah. Hel helping them get out of debt. And if she wants

to go back into ministry, once they're debt-free, she can do that. Yeah, that's a good point, George. When you're getting out of debt, you are almost required to do some jobs that you don't want to do. You're almost required to put like- Yeah, your passions and dreams are a luxury that you can't afford right now. That's right. You put them on hold and maybe you can dabble in it, but you got to ultimately do the thing that's making you the most money. As long as it's legal, you need to be doing whatever is going to make you the most money. I'd be volunteering at the church on Wednesdays and Sundays. But other than that, I'm going to go make 60 grand elsewhere to knock out this debt.

And it's temporary, right? It's not like we're saying for the rest of your life, you can't live your dreams. But maybe for 18 months, you put those bad boys on hold and it's just a dream deferred. It is not a dream denied. This is The Ramsey Show. This is The Ramsey Show, where we help people build wealth, do work they love, and create actual amazing relationships. I'm Jade Warshaw. Next to me is George Campbell. Taking your calls. Call in. The number is 888-825-5225. Christian is on the line. He'll pick up and screen your call and get you through. We've got Eden in Seattle, Washington. What's going on, Eden?

Hey, I literally just turned on your live show and I saw one of the other callers had asked why it's bad to use credit cards if you can pay them off. And so now I'm just like wondering, if you have a good credit score, doesn't that help lower the interest on a house loan, which is almost the exact same thing, you know, as the other call? How do I increase my credit score? And does that even matter for interest on a house loan? Your credit score does affect your mortgage interest rate. What we're talking about is if you follow the Ramsey plan, you pay off all of your debt, you have no open accounts,

eventually, six to 12 months later, you will have an indeterminable credit score. That's what happened to me. So then I said, well, I got to buy a house. And so I went and bought a house. I did a process called manual underwriting with a no score loan. And I got a very competitive interest rate because I had good reserves, strong income, strong down payment, and did a 15 year fixed rate mortgage. And lo and behold, I got a great interest rate. And so there's just,

there's a way around it that's really not that big of a deal and not that much work when it comes to buying a home. But it will impact if you have a bad score, it will hurt your rate. Yeah, and just my boyfriend and I have plans to buy a house, you know, maybe 10 years, but we both don't have very high income jobs. And so we're going to try to save as much as we can to get as big of a down payment as possible. But if we don't have that good enough income, I feel like we might need, you know, a bigger loan, a better credit score to get that loan. Well, the credit score is one piece of the puzzle. And so the banks, you know, they'll loan you way more money than should be legal, but your income is going to be a factor. Your debt is going to be a factor when they say,

yes, we're going to give you this mortgage or not. Yeah, because at the end of the day, Eden, whatever you decide on, you don't want to be house poor. So you've got to get that loan to the point to where it's not eating up too much of your monthly income. And we say no more than 25%. So whether that's you putting down a hefty down payment, but to George's point, yeah, whether you do that with a no score loan or with the credit score you happen to already have, if it hasn't fallen away yet, either way, the no score loan is just as good as a good credit score. You can get all of the same things. And so that's really how this works.

And so for anybody who's listening listening when we talk about a zero credit score loan or a no score loan also manual underwriting here's here's what you first need you need to find a mortgage company who will do it because every mortgage company doesn't do that so we always recommend churchill mortgage um i've used them george's used them john has used them we've all used them and i'm sure there's others out there that do it. There are. We use Churchill. So don't think that Churchill is the only one. But if they're not in your area, then do your due diligence. But they've been doing them since before they were cool because they've been a partner of the Ramsey show for decades. That's right. And so they specialize in these types of loans. And we send so many of our fans

to them that they've gotten really good at them. So they're the number one in the country with these types of loans. Yeah. And so if you say, okay, I'm doing this, here's some of what you can expect. They're going to want to see rental history. Okay. So they're going to want to see 12 months of documented rental history where you've been paying rent. So I always say, if you've got a situation where you're living at home or something like that, make sure you're documenting because if you're going to want to buy a house, you're going to need to show that rental history. They're going to want to see other forms of payment history, trade lines, and they're going to want to see 12 months of that. So trade lines are things

like cell phones, utilities, even if you're making insurance payments, they want to see 12 months of that. So make sure you're keeping your records. Tax returns. If you are self-employed, tax returns are a big part of this. When my husband and I did our zero score loan, most of our income was tax was self-employed at the time. So we had to show our business tax returns. We had to show our personal tax returns. And so that's part of that actual money, George, income. Imagine that. Even if you're not self-employed, they're going to want to see 12 months of pay stubs.

OK, 24 months of your self-employed. So pay stubs are going to want to see the last 30 days if you were self-employed. So they're going to go all the way up to that point. And then, of course, we talk about down payment. Obviously, the bigger, the better. Here on The Ramsey Show, we talk about trying to hit 20 percent, but for sure, no less than five to 10 percent. OK, and we're always talking about a 15 year fixed rate conventional

loan. And to go back to the interest rates, you're going to get a better interest rate if you do a 15 year versus a 30 year. So that's something there. And of course we said the payment should be no more than 25% of your take-home pay. So if you do a zero score loan, that's what you can expect. Be prepared for that ahead of time. And that'll kind of let you know what you're getting into. All right. back to the phone lines. Matthew in Pensacola, Florida. What's up, Matt? Hey, Jade.

Hey, George. I'm calling in because I purchased life insurance when me and my wife first got married, and that was like a year ago. But since then, we bought a house. So I have my policy set to where it pays off our mortgage and then leaves her with about $50,000. I was wondering if I should increase that policy or if I should leave it like that. When does the policy expire? I think 15 years, so like 14 years into the future. Okay. So play this out with me. If you follow the Ramsey plan to a T for the next 14 years, what's going to happen? Number one, you're going to pay off your mortgage, right?

Yeah. So that negates the need to pay off the house with that life insurance money. So what is the total face value of the policy? $250,000. Okay. And is this term life? Yes. And what's your income? Right around $60,000, but she's expected to graduate in May. What's your personal income? 55. Okay. So we recommend having 10 to 12 times your income in life insurance. So if you take 55,000, I'm going to multiply it by 12. You should have over $600,000 in term life. And right now you have 250. So you're underinsured, but it has nothing to do with the house. I would get a new policy. What you can do, you don't have to cancel your policy. You can get a new policy on top of that. So let's say you get

another $400,000 in term life, which is still going to be super affordable at your age, and let that ride for another 15 years. Okay. Did you go through Zander? No, I didn't. Okay. You can jump on ramsaysolutions.com, go to Trusted Services, and you'll see Term Life there. And Jade and I, we both have our Term Life policies through Zander, and they shop the top companies. So you're not stuck with one company and one quote. They'll shop the top-rated companies and give you the best price. And, Jade, it's really interesting how Term Life works because they go, well, how are they just charging one price for all of that time? What they do is they look at the risk of what all the premiums would be over time because as you get older, there's increased risk. That's right. You know,

that's just how life works. I didn't make it up. God did. Take it up with him. And so what they do is they divide that and that becomes your set payment. So it's level term life policy is what you want. Avoid whole life like the plague. Avoid anything that says permanent, whole, universal, indexed, all of that. Run from it. There is a dude trying to scam you if they're trying to sell you on that because it's an investment, Jade. You can use this cash value. Well, explain it, George. You got time. Tell us why. The main idea with whole life, permanent life is that you not only have the term life, but you also have this cash value, which can grow because you're putting money into it,

like a really crappy savings account. And then depending on the type of insurance policy, it can be invested, it can track with an index. And so you've heard index universal life as an example. Yeah, but the rate of return is... Well, and what happens is the premiums are like 10X. So instead of paying $15 a month or 20 bucks a month, you might be paying 200, 300, $400 a month into these policies that then have a really crappy rate of return. And so avoid those, stick to term life. Some of them are like 3%. Some of them are really bad. And you wonder, how is that possible? Well, a lot of the commissions are going into the pockets of these really just salespeople. They're not trying to help you. They're not even licensed to help

you invest. And it's insurance agents posing as wealth advisors is how I talk about it in my book, Breaking Free from Broke. So term life is all you need. Xander is who we trust. So jump on ramsaysolutions.com. Get it in place. If you are an adult, if you have people that rely on your income, kids, a spouse, you need it. Stay-at-home parents, you absolutely need it. Get at least a half-million-dollar policy on that spouse who's staying at home, because you've got to get Mary Poppins to replace all the things that they do. That's for sure. Term life insurance with Xander. That's what you want to go to. This is The Ramsey Show. All right, your scripture and quote of the day from The Ramsey Show. Remember this, the Lord, remember the Lord your God, for it is he who gives

you the ability to produce wealth, and so confirms his covenant, which he swore to your ancestors, as it is today. That's Deuteronomy 8, 18. I actually really like that scripture. And then Chris Rock said this, wealth is not about having a lot of money. It's about having a lot of options. I like that. I don't know why whenever I see Chris Rock, I want to like do an impression.

I would pay you to see that. It's about having options. I don't know. I do wonder if he said it like out loud or if it was in like an article interview. It feels more introverted. Like it feels more thought. And how do wonder if he said it like out loud or if it was in like an article interview it feels more introverted like it feels more thought and how do we know he said it i don't know i always imagine question these quotes where are these coming from guys i'm imagining the zebra from madagascar saying that could be if you have kids you know all right digress. Let's go to the phone lines. Nicole in Scottsdale, Arizona.

What's up, Nicole? Hi, I actually have a kid related question. I'm calling on behalf of my 14 year old who has a lot of options. Okay. And I don't know how to guide him. He took the Dave Ramsey class and actually has given us as parents some information and helped us and we jumped on the baby steps. Yeah. He has about $20,000 in net worth, I should say. Um, he stays in phase. Yeah. He's doing great. But the question is he's kind of stuck in the middle. He's 14. He doesn't have a consistent income. He houses, he, uh, works at a market, does some other things because he keeps only 14. He can't get a regular paying job.

And so the ladies that don't apply to him, he can't save for an emergency fund. He's not having any emergencies. He can't save three to six months. So we were just kind of stuck for him. The two things he wants to save for are he wants to open his own business so that he can cash, get cash at 14 instead of have dependent on other people for money um he also would like to he knows he's going to need to pay for a car um he has one but it's not a dependable driver so he he wants to save for a

dependable driver car okay so our question is do we keep putting this in his custodial fund, his inconsistent funds, and then when it's time we pull the money out of there? Or does he put it in a high-yield savings account? Where does he put this money that he needs to save for these two projects? So I love that he has goals, and I love that he's really embraced this. He's going to be a bajillionaire because of this, which is really, really cool. You're going to have a nice nursing home one day, Nicole. It's going to be top of the line. Thank you.

That's so funny. Sometimes it's a little much. You know, he's like, should we be buying this? Should we be doing this? Oh, yeah, you created a tiny adult. Once you go through that course, you can't unsee it. Now he's judging your purchases, going, Mom, you know what the interest rate is what are you doing college is not an issue he's headed for the military so okay that or or he knows he needs to get a scholarship we're not we that's clear for

him so okay well i mean uh you could do it one of two ways uh the custodial account it's an it's an invested account right that's what you're talking about? Okay. So part of that is once it's in there, it's kind of locked in. And we kind of say, if you're going to touch the money within the next five years, you don't want to put it in there. And so with you talking about this car coming up, I don't know what type of business he's wanting to start, but if he was wanting to start it sooner than later, then I would not invest that money. I'd probably go for the high yield savings account and then from here on it's just about starting to earmark this and just teaching him that same like give save spend okay if we're doing a car

how much are we spending on it how much are we saving regularly uh out of this business or out of the money that is coming in for you and how much of it are you going to invest back into your business and really looking at those ratios because right now he's 14 but the time is going to come when he's 16 and he's going to want that car and the time is going to come when he's 18 and he wants to move out of the house and so I think the biggest play here is probably the savings play but I'd also want to encourage him to start working those giving and spending muscles as well. George? Yeah. He has the giving. He's giving right now?

Not that it's spending. Yeah, he gives. He definitely gives. He's definitely a giver, and he wants for nothing. But I think the spending thing, we need to find some sort of balance there. I would force a fun line item in his budget of just fun money where he's got to go do kid stuff. Go to the movies, go to the mall, buy an $8 popcorn, just do all the things that kids do on top of investing 15% of his income. I mean, he can contribute to a Roth IRA through a custodial Roth. And so that's

a great way for him to invest for retirement. There's even a parent taxable brokerage account. If he wanted to save for something outside of retirement in the next 10 years, let's say a down payment on a house. That'd be great. He can begin that journey now on top of putting money in a high yield savings for those short-term goals. Those, you know, let's call them three to four year goals, like he's going to need deposit money for an apartment maybe one day or travel money or that car. And so I like that mentality of short-term goals, high-yield savings account, long-term goals. Let's start to think about retirement and show them in a calculator, Nicole, because it'll light him up to see

from 14 to 64, what does 50 years of compound growth look like? Even on this little amount of money I'm putting in here, he will be like, oh my gosh, that's amazing. That is. Because it sounds far away, but future him will thank him. Yeah. Like I say, he's going to be a bazillionaire, but all work and no play is no fun. So make sure that he's having a little fun with that money as he goes along. Yeah. He has a higher net worth than most of America. So way to go at 14 years old. Way to go. Thank you for the call. All right. We got Jim in Eau Claire, Wisconsin. What's going on, Jim? Hi, guys. Thanks for taking my call. You bet. My question is, is my wife and I have an opportunity to purchase some neighboring land from where we live and we have the first chance of buying it. And I think it's going to be more

than what we have liquid cash to pay for it. So we have a good net worth. We don't have any debt. I was just wondering if it's okay to take, rather than a loan, is it okay to take money out of your Roth IRA, the money that I've contributed to, to get some of it back to make the purchase? How old are you? I'm 49. Okay. And you're saying, well, if I just touch the contributions from the Roth IRA,

there's no penalties. Correct. My issue with this is that the money you're taking from the Roth IRA could be 10x or 5x if you had just left it in there. So you're unplugging all of the growth in order to put it in this land. So that's the trade-off you're making. How much do you have across your retirement accounts at 49? Okay. I have $600,000 into my Wisconsin state retirement. My wife has $100,000 in her 401k. We have $245,000 into standard and Roth IRAs. And we, yeah, and we have about $170,000 in liquid cash and a high-yield savings. How much would you need for the land? I mean,

you've got the $170,000 minus your... I think it's going to be about $250,000. Okay. Okay. And of the $170,000, how much of that is the emergency fund? I would say I would keep $30,000 to $40,000 for emergency. So I have about $130,000 to $40,000 to put towards this land. And then you'd need another $120,000? Yes. And I mean, I don't think this is going to decimate your retirement because you guys are 49. Just know that you're going to have to make up for this on the back end, depending on what your retirement goals are. You're going to have less options if you wanted to, let's say, retire at 55 early because you wanted to or because you had to. It just might hurt your chances of retiring at an earlier age.

But if you're okay, I mean, if you look at your investments, if you invest wisely with a 10% return in the market, that money is going to double every seven years. So, you know, in your late 50s, you guys are going to have beautiful nest eggs of, you know, one and a half million dollars. What's the land for? What are you going to do with it? Well, it's totally sentimental. I grew up around here. I've looked at it for years and years and years, and I always said to myself, if I ever get a chance to buy it, I'm going to just for something to pass along to my two sons. It's nothing, but yes, it's a sentimental.

What's the urgency? Could you wait six months? Would they hang on to it? Possibly. I'm just wondering, how fast can you scrape together another $100,000? Pretty fast. But they also mentioned a land contract, possibly, where they wouldn't need all the money at once. And I know how Dave feels about land contracts.

He's not for them. I would tread lightly and not let emotion drive this decision, which right now, you said, this is just sentimental. There's really no reason one day I want to be able to pass this down. Your kids will be happy with the land they got that you're living on right now. So I don't know. I think if you can scrape together this money and maybe you show them in some way that you're good for it, I would do that. I mean, ultimately, it's your money to do what you want. You're taking one investment and putting it into another investment, which is land. So that's your choice. Do with this what you will.

This is The Ramsey Show. you