The Ramsey Show - App - SoFi vs. the Education Department: They’re All Villains! (Hour 1)

Episode Date: March 9, 2023

Dave Ramsey & Kristina Ellis answer your questions and discuss: "How can I untangle my parents' financial mess?" SoFi's fight to end the pause on student loan repayments, "Which property should I pay off first?" from the blog: What Are the Baby Steps? "How can I support my son who is recovering from addiction?"  Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Want a plan for your money? Take our FREE 3 minute assessment: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

Live from the headquarters of Ramsey Solutions, broadcasting from the Pods Moving and Storage Studios, it's The Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships. Thank you for joining us, America. Christina Ellis, number one best-selling author and Ramsey personality, is my co-host today. We're answering your questions about your life and your money.

The call is free at 888-825-5225, and some say the information is worth exactly what you pay for it. 888-825-5225. Christian starts off this hour in Seattle. Hey, Christian, how are you? Hey, I'm doing all right. Good. What's up?

So my parents, I have a little unique situation. So my dad is 92 and my mother is 62. And my dad has about $3 million tied up in stocks, and then he has sold calls on those, and then he has some cash that he has done some puts on that he's kind of all tied up in. And so he's aging. I can see that he's not doing super well, and then my mother's going to be left with

kind of this unique situation to untangle. I have financial power of attorney for both my parents. And so I'm just thinking ahead here when my father passes away i need to try to help my mother kind of probably untangle some of this go ahead and do it now thinking about um well i i guess i just always kind of thought it's it's his stuff and let him let him do it until he's not around anymore i thought you were doing it well he's he has me help him uh just because he he does a lot of his stuff on a brokerage account online and how does the conversation sound when you say hey dad this is a tangled mess to leave mom let's get it untangled yeah let's you and i work together to untangle it

starting right now ready set go how's that sound how's that conversation go no i want to do this till i die is that what he's going to say i'm 92 yeah he's just kind of stubborn but yeah i should i should probably have that conversation what's the hesitancy it does seem like you're a little bit like reluctant have there been bad conversations in the past or is there a history there? Well, he's very, you know, he's done well in some areas and so he's just very stubborn and adamant that, you know, he kind of knows best. And so, you know, he's even tried to kind of influence me on some of the decisions I make financially. And so I just, I just didn't see that being a very... What is it that needs to be untangled for your mom?

Give me an example. Well, so I'm just thinking if he passes, my mom's going to have no idea what to do with docs or have calls on them years out and just, you know... Yeah, so, Dad. Yeah. Mom, you're going to die, and Mom's going to be left with this, and she's going to have no idea what to do with this.

Let's set this up for her, not for you. Dad. Yeah. I mean, this is an act of love of him towards his wife to not leave her in a lurch. Yeah. And I wonder if you can kind of make it that empowering conversation where

it's like, I'm not trying to get in your business. I'm not trying to run the show, but I'm just trying to help mom. And this is the opportunity for you to make it less complicated for us. Like just even make him feel part of the process. Like you still have ownership of this. This is still you running your finances. You're just getting us prepared for what's next.

We're trying to set her up to win not him right right it's yeah you know if he won't do that then the best you can do is just make a bunch of lists of stuff and try to have an inventory and then go ahead and develop a strategy for you know liquidating the crap out of this stuff as soon as he's gone sorry but that's just i mean wow how cold is that but that's what you're gonna have to do just go sell order sell order sell order sell order sell order close that brokerage account put it in cash move it to basic mutual funds with a good smart rest or pro and let mom just live off the income that that creates and it's boring as crud and because your dad's a

player right and that's the problem yeah but I'm just going to I'm going to liquidate I'm going to turn it all into money I'm going to liquidate the crud out of it that's what you're talking about aren't you yeah so we either do it now

or when he's gone is he sick not that I'm aware of but I can tell he's kind of slowing down yeah okay um is is so on in terms of mutual funds i know there's targeted ones and my mother's approaching retirement age can i stick it in something like a targeted i wouldn't i would not go with targeted i would just say i'm going to pick some mutual funds she's 65 years old she lives to 90 she's got 30 years to outpace gas prices outpacepace bread prices, outpace energy costs, whatever it is. And so you just put that in a series of good growth stock mutual funds.

They don't have to be targeted to her age. I'm 62. I haven't moved any of mine to anything targeted. I'm planning to live up. I'm going to be as old and ornery as your dad. We're counting on it, too, Dave. Yeah, you're counting on it too dave yeah you can't you counting on it a lot but yeah but yeah i mean that's that's the thing so bless his heart that's

i love the guy because he's he's a player 92 he's still swinging man still hustling after go run a half marathon while you're doing it dude but uh oh my gosh yeah um but you know one of the things about money and business and assets is you need to one of the things we're trying to do is change our family tree not not mess it up and not leave it uh to people who can't manage it not leave it to um in improper forms which is what this is the form of investment is a problem and but it requires turning loose and you know when you face this stuff it's kind of like doing a will um when i face this and i start turning over sections of this company to to the next generation and that kind of stuff you're admitting that you're going to die and it's it's disturbing yeah it disturbs you if you're 92 or 62 or 12. I mean, when you admit you're going to die, it's a hard thing.

Although we intellectually know it, you emotionally go, oh, crap, I'm going to die. You know, I mean, it's like, so, yeah, you got to do a will. You have to set up your asset base to be a blessing to the next generation, not a curse. You need to do your succession plan if you own a company or you're running an organization. Your job is part of your job is to have a way to turn it over long before you grab your chest and fall back to the grave and throw the keys out on the way down and so no you need a plan and that's called loving the people in your life well that's good and he mentioned that he currently has power of attorney for both parents is it smart for

somebody in his situation to just start making moves? No, I wouldn't. I wouldn't. Relationally, I wouldn't. Legally, he could go just do whatever he wants to do right now. But I got to tell you, the guy he's talking about is going to blow a gasket. I think that's kind of the fear, the hesitation. Well, I mean, rightly so, because the guy, you know, he gave it to him in case he becomes

suddenly has a stroke or something and he doesn't have to. Instead of he could have done a special power of attorney or medical power of attorney or whatever. Instead, he just gave it to him in case he becomes suddenly has a stroke or something and he doesn't have to instead of he could have done a special power of attorney or medical power of attorney or whatever instead he just gave it to him now but then did not give him he gave him the power but he didn't give him the moral authority the the right ethically to just go start walking through there with muddy boots well and it seems like he must have some sort of strong personality because the son does sound pretty hesitant do you think he's trying to be hesitant. Do you think it would be... Well, he's trying to be respectful. Well, do you think it'd be good for them

to sit down with, like, a smart vester? Is it better to have, like, a third party in the room to kind of help his dad feel more empowered? It's going to be three conversations before you get that far. Man. Yeah, because this guy's not going to listen. If he wanted a smart vester, he'd already call one. It's true. He is 92. He's a player. He's got a lot of years to do it. He's a player. He's doing his own stuff,

man. So, yeah, it's... You just got to sit down and navigate dad is what amounts to. And the best way to do that is the good news about a guy like that is he probably has a huge heart and he probably really loves his wife. And that's the string to pull because that's also the truth. You need to do this for your wife, dude. You do this for mom. And that'll move him more than anything else will move him. This is The Ramsey Show. Hey, you guys, health insurance costs are only moving one way, and that way isn't down. And if higher costs aren't enough, the wait times to see your doctor are longer, and it's harder than ever to get anything approved through the bureaucracy. So if you feel like the system is working against you, try a biblically-based alternative to health insurance, Christian Healthcare Ministries. CHM is a health cost-sharing ministry that's helped

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So learn more today and join at chministries.org slash budget. That's chministries.org slash budget. Christina Ellis Ramsey Personality is my co-host. She's also the author of a book called Confessions of a Scholarship Winner, where she documents the fact that she got a half a million dollars in scholarships, $500,000, went to Vanderbilt and to Belmont getting her undergrad and then her master's degree, all 100% free. And she's one of our resident experts on how not to get into student loan debt. Obviously, scholarships is one way to avoid that.

And so I keep my fingers on this student loan epic colossal disaster enough to be stirring up a ruckus pretty regularly. But Christine is our resident expert on it. So the Supreme Court met. Have they ruled? They haven't ruled yet. They haven't ruled yet. Wait a minute.

I thought it was all going to be over February 28th. Wait a minute. No, no, no, no, no, no. Didn't happen. They're going to delay. Oh, it's going to take a while. Oh, who knew? Me.

You've been calling it. Yep then and then here we go our buddies over at sofi which run the little sweet little sweet nurturing commercials about how much they love you and then they sell you crappy financial products they got a nice stadium though oh gosh everybody needs a nice stadium if you're gonna sell crappy stuff you should have a nice stadium, though. Oh, gosh. Everybody needs a nice stadium. If you're going to sell crappy stuff, you should have a nice stadium. With all the profits you make from your crappy stuff. There you go. So what's up? Well, now they're getting into the student loan fight.

There's an article that said SoFi Bank sues to block Biden's student loan payment pause. So this is another lawsuit, y'all. And it's not even just to stop the program it's to stop the pause the article says a private bank is trying to force the biden administration to end its pause on federal student loan payments arguing the moratorium has no legal basis and has cost the bank known for its refinancing business millions of dollars in profits about hundreds of millions that just makes me want to throw up a little bit right there. Like if you...

That kind of tells you what's going on now. Their motivation obviously is so pure. Yes. It says in the federal lawsuit filed Friday in Washington, SoFi Bank asked a federal judge to overturn President Joe Biden's latest extension on the payment pause. Student loan payments were first halted at the start of the pandemic by President Trump. The pause has been extended eight times over the last three years. The bank says its federal student loan refinancing business has suffered because borrowers have little incentive to

refinance while payments and interest are on hold. At a minimum, the lawsuit asks a judge to limit the pause only to borrowers who are eligible for the Biden cancellation plan. Biden's latest extension, which was announced in November and could stretch as far as this summer, is unlawful on multiple grounds, the lawsuit claims. The plan is currently being challenged in the Supreme Court, which is expected to rule by June. You know, this is interesting. The extension, the pause was basically under emergency times in a pandemic. And it was emergency powers, if you will, granted to the president to help things. And it has moved from him, Trump first, and then later even Biden, helping people during the pandemic make it through their student loans.

It's moved from that as a motivation to, now I just don't want them to have to pay their student loans, so I'm just going to kick the can. And I'm the guy that can do that. But there's no emergency anymore, so I think kind of, even though I think SoFi's pretty scummy, it probably stands for scummy five but the um but uh i think there's probably a basis for the lawsuit i know well and even it's not like

you've had it's not like you can go we have to extend the student loans because of the pandemic or like wait a minute it's over dude it's over nobody's wearing a mask dude fauci's gone dude i mean really you need to catch up. That's so 2020. I mean, really. And, you know, it's like he doesn't have that power on that basis anymore. Well, and that's what they're even saying with the whole cancellation plan right now is he's trying to cancel it, you know, based on what happened in the pandemic.

And they're like, that's over. Like, how can we cancel it based on that? So even so far in the Supreme Court case, there's a lot of skepticism from the judges going, wait a minute, how does this connect? And how can you use this reasoning if you're also saying the pandemic's over? So the education department comes out and says it's an attempt by a multi-million dollar company to make money while they force 45 million borrowers back into payments, which is actually true. It is an attempt by a multi-billion dollar company to collect interest on the loans that they have.

And also to get more people to refinance. Which I'm like, isn't that horrible marketing to be like, we're going to stop the pause and now you should come refinance with us. When they were thinking about filing this lawsuit, did they not consult their PR department? I'm like, oh, swift condemnation from borrower advocates who called it a money grab at the expense of those struggling with student loan debt oh well it could be at the expense of the taxpayers right now and i didn't have a student loan debt when all this started. Did you? No. We're paying the interest right now.

So, because you know this is not, yeah. I think it's just important to highlight, too, that these companies, they don't care about you. As many. There's just no, everybody in the article is evil. Well, it's like they're going to put out. The government, the Supreme Court, the education department education department so far there's no angels in here there's no there's no angels in a lot of this process this whole debate on student loan forgiveness like it's like all villains there's no where's the hero all villains in the story it's a horrible story a villain story but then when

you see the sofi commercial after all this where everybody's holding hands and they're there to help you and they're there to help you and they're so friendly we hope you get out of debt by borrowing on our stuff remember this get out of debt you just borrowed the debt yeah you're right you're right no love loss for the biden kick in the can no love loss for the education department no love loss for sofi for dad gum sure but also a good reminder to start paying on these loans like hello this is all not looking good right now like we've been waiting for a long time for decisions and as this is playing out it's not looking good at the same

time we told you not to buy crypto we told you to get out of debt because it's not going to be forgiven. When all the smoke clears, you're going to pay it. So quit acting like it's not there. Denial is not a river in Egypt. You need to actually not be in denial, okay? You're going to have to pay it. Pay your loan now as fast as you possibly can. You keep waiting on the Calvary to come over the hill,

and it looked like Joe Biden in the lead. It's not. It's Custer's last stand. They're not going to make it. Okay? Not coming. They're not coming. They're not coming.

You are in charge of your life. You have to fix your life. SoFi is not going to fix your life. They're coming for your throat. The government's you have to fix your life sofa is not going to fix your life they're coming for your throat the government's not going to fix your life they're going to lie to you to get your vote and then do nothing they do that all the time they are specialists at appearing to do something and nothing occurs that is like a washington art form okay we are going to announce a new program today that's going to have absolutely no effect but we're going to try to impress you with it anyway and this is what they do full

freaking time up there oh it's just ridiculous it's so sad to watch it to happen with real lives these are real people who are freaking out about their student loans and they've been waiting and i know a lot of people are going to say well i can't afford to pay it off get six jobs and the payments are coming like the payments are coming that's going to happen like you have to carve out space you can't like you have to pay those back it's not going away it's not going away you can't bankrupt them you're going to pay it they're not going to forgive them you should have already done it and what you just watch the cast of characters here everybody in the story is a villain you're the only hero be a hero in your own story roll up your sleeves get your butt in gear get these things paid off and quit whining shut up six jobs

it's what normal people do it's called calluses on your hands wussification of america get out there get it done seriously 16 jobs i don't i mean what do you my grandmother should say there's a great place to go when you're broke to work to work just get your butt in gear this is ridiculous y'all i mean it's crazy and we're all sitting around we're gonna quiet quit we're gonna quiet quit we're gonna major in mediocrity and wait on 15 an hour at mcdonald's to life. You're not going to get rich working at McDonald's. Even if you own one, you're probably not going to get rich. Oh, my God.

Get your budding gear. You heard it today, y'all. This is your wake-up call. Payback the loans. SoFi to the rescue. Those are the scariest words I've heard this week. Ouch. Christina Ellis Ramsey personality is my co-host today in the lobby of Ramsey Solutions on the debt-free stage.

Allie and Lauren are with us. Hey, guys, how are you? Hey, good. How are you? Welcome, welcome. Where do you all live? From Yorktown, Indiana. Which is near? Indianapolis, about 40 minutes northeast. Perfect. Okay, great. Good to have you? Welcome, welcome. Where do you all live? From Yorktown, Indiana. Which is near? Indianapolis, about 40 minutes northeast. Perfect.

Okay, great. Good to have you guys. Thank you. So how much debt have you paid off? $100,057. I like it. And how long did this take? 22 months.

Wow. And your range of income during that time? We started at $185,000 and ended at $225,000. Very nice. What do you guys do for a living? I work in human resources slash employee benefits. And I run a skilled nursing and assisted living facility. Ah, very good. You're doing well. Congratulations. Excellent job. What kind of debt was your $100,000? Auto loans, student debt, and then also a guitar. I'm a worship leader, so I bought a guitar right

before we started and of course you did yeah it was a good kickstart to our snowball so you're kind of normal just bopping along how long you guys been married it'll be nine years in August so what happened 22 months ago that lit you up and you decided we're gonna do the Ramsey way yeah so her sister and our brother-in-law, they were working through the baby steps and they introduced us to all of the program. And so we're simultaneously working through it now. So Brandon and Kylie, thank you guys for that. So, and now they're, they're still working through them with us. And a pastor of ours had all of the information he had taught the course. And so we were able to take Financial Peace University through him as well. Oh, wow. Very good. Okay.

The power of community. There you go. Excellent. Excellent. So you don't sound like you were resistant. What caused you to seek this out after you've been married all this time doing it the other way? I think I was resistant at first. He talked me into it and I was like, sure. And then for a second, I was like, what did he sign me up for yeah um because I couldn't you know just go buy my normal outfit or whatever but then I found out how much we were spending on you know normal outfits yeah and it sort of was like oh wow you know so um I took a step back and I wiggled in my seat a little bit but then it became a game for us. Yeah. Okay. My favorite and during Financial Peace University is when you said that logic catches up to your

emotion. And that explained us perfectly because I love cars and just to have nice things. But when the logic caught up to it, it worked out for us. Yeah. It shuts you down. Wow. So y'all did this quick, 22 months. That's fast. And you had a big income jump, but that still is a lot of hustling. What did this journey look like? How did you get out of debt? Honestly, just continued blessings throughout the way. We would budget for what we needed to pay off. Using the EveryDollar app, we use that consistently. And we would get, whether it was an unexpected bonus or more back on our tax returns than what we needed to pay off uh you know using the every dollar app we use that consistently and uh we would get whether it's an unexpected bonus or more back on our tax returns than what we were

expecting it was just full of blessings throughout the whole way god is good that's so good and just the power of commitment of making that discipline and staying focused right it starts to roll you get that momentum now whose brother or sister was this my sister your sister and they've been doing it for how long? They started about a year before us. Okay. So they weren't that far into it either. Right.

It wasn't like they'd been doing it for 10 years and trying to get you to do it. Right. So you kind of, when you started then, Lauren, you're like, my sister's nuts. Yeah. What is she doing? Yeah, they weren't going out to eat with us. And I'm like, you guys aren't going to meet us for dinner? You're not fun people anymore. I'm like, you guys aren't going to meet us for dinner? You're not fun people anymore.

I'm like, come on. And then, you know, we got into it and we had to tell people no, too. And that part sucks. You became one of the nutty people. Yeah. One of the weirdos. Absolutely. And you paid off $100,000 freaking dollars.

Does that blow your mind when you say that out loud? It does. That's amazing. It's amazing. And you do kind of look around and go i work really hard but i do feel like god kind of did some of this for me absolutely yeah i feel i always talk about it's you know like you're heading the right direction and god says oh finally a smart one and so you're like as you're walking along you're instead of walking along now you're up on his

moving sidewalk while you're walking so like at the airport when you're walking on the moving sidewalk, right? Right. You know, it's like you're getting double time here. God's pushing you and you're walking. It's perfect. Yeah. Absolutely. But it's just that he, oh, there's a smart one.

We can help this one. Yeah. He's waiting. Because when you're faithful in the little things, you'll be given more to do. I mean, that's scriptural. So good job, you guys. Yeah, we're excited to give like no other. Amen.

Yes. Amen. Way to go, you guys. So six figures and you're young how old are y'all i am just recently turned 28 on monday oh happy birthday wow and i'm 30 okay all right so before you're 30 you clear it up yeah that's amazing and we were just talking about student loans and all the people who you know don't want to pay it off we live in a culture right now where people think like they're gonna drag it around around for 30 years. They all said no.

22 months later, they don't have to worry about SoFi or Biden. Isn't that interesting? Kicked them out. See you later. Just like that. So what would you tell the people who think that it can't be done? What would you tell them to get them off the fence? I mean, the two things that I would say is I know it's kind of cliche.

Make sure you stick to your budget. Not only just make one, but stick to it. And then the second would be the math may not make sense, but if you're not tithing to a home church somewhere, it will take much longer than what it should. So you need to be tithing. That's huge. We had blessings just continuously

along the way because of that. What church are y'all in in Indy? Union Chapel. All right, just outside of Indy. Okay, cool. Very that. What church are y'all in in Indy? Union Chapel. All right, just outside of Indy. Okay, cool. Very cool. Good job, y'all. Very fun.

Very fun. It's powerful. Thanks to the brother-in-law, sister-in-law, and to the pastor for digging the FPU off the shelf and helping them out. That's excellent. Way to go, guys. Way to go. Way to go.

Good stuff. Hey, we've got the live and give bundle for you to say thanks for coming on and doing your debt-free scream. That's the Baby Steps Millionaires book, Next Step in Your Journey. The Total Money Makeover book, you'll be able to give that to someone, maybe get them inspired to start a Financial Peace University membership and give that away maybe, or maybe go through the new one, whatever you want to do. Sounds like you got the old one off the DVDs or something, but either way, whatever you need to do, it's all for you guys.

And let us be a blessing to you guys as well. Very, very well done. Allie and Lauren, Indianapolis, Indiana, $100,000 paid off in 22 months, making $185,000 to $225,000. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free. We a debt-free scream three two one we're debt-free love it well done you guys so proud of you very well done good stuff hey guys smart conference

is back and better than ever this year it's going to be a full weekend, a Friday and a Saturday, April 14th and 15th. And the Smart Conference will be really, really special. It is the inaugural event, our first event at the new Ramsey Event Center up here on top of the hill. And they're out there rolling out the sod right now, finishing up the last details on it. It is absolutely stunning. We want you to be part of it. Come out there. I'll be speaking.

Rachel Cruz, Dr. John Deloney, Ken Coleman, George Campbell, Christina Ellis to my right, Jade Warshaw will be speaking. We're going to be doing all kinds of things. We'll be doing the show up there on a Friday live from the new event center. It's a Nashville event, so we'll probably have some of my buddies that are in the country music business not probably we will uh stop by on friday night and they might like have their guitar or something so it might be kind of like a surprise you never know who's going to show up when when dave's around so i've been known to cause a ruckus so come around we'd

love to have your ramsey event center it is almost sold out, by the way. Yesterday at this time, there were 74 tickets left. So if you want to come, we would like to have you, but it's just a handful of tickets left. They're $119 still. And go to ramseysolutions.com slash events, and you can find out the whole story on the new Smart smart conference that's going to be here at the new event center and uh it's gonna be a lot of fun christina it's gonna be fun and man that event center is beautiful i can't wait to actually use it to actually use it and to have like a big party i've been paying for it for two years and i'm ready to use it so yeah it's uh been writing

these checks to to the sweet and kind people that are building it. And wow. Well, you did a good job, Dave, walking up there and touring it. I'm really good at writing checks. Yeah, no, they did a good job building it. They did. And it's fabulous. Yeah, we're looking forward to actually showing off.

Yeah. And having all of our Ramsey personalities doing different things all day long. And it is a Friday and a Saturday. So make plans to come, make it a Nashville weekend for yourself. And again, just a handful of tickets left. Smart Conference, April 14th and 15th, coming up in just a few weeks here. Don't miss it. This is The Ramsey Show.

All the reporting mechanisms that we have, say our podcast listenership, our YouTube viewership, and our radio listenership are all up. Thank you. Thank you very much, audience. We appreciate you. That also means there's a bunch of newbies out there that are trying to understand all these code words we use around here, like baby steps and debt snowball and all these things that we sneak up on you with. If you're a new listener and you want to dive deeper into this whole Ramsey baby steps thing, this movement, the Ramsey way, go to RamseySolutions.com. Click on the get started button. Get started button. It's completely free and we'll help you figure out the best next step for your financial journey based on exactly where you are today. So get started at ramseysolutions.com. Again,

completely free. We just want to help you kind of get, I don't know, grafted into the tribe. All right, Jason is with us in Atlanta. Hi, Jason. Welcome to The Ramsey Show. Hey, guys. I am actually one of the newbies listening to your show I finished the total money makeover and I just have a couple of questions about the baby steps regarding baby steps 2 and 3

so the first one should be hopefully pretty easy for you guys do I include tithing and gifts as part of the expenses when calculating for the emergency fund. And then number two, it's kind of a little bit more complicated. It talks about like rental property should be maybe delayed and it's not included in baby step two.

But then when we pay off the mortgage of our primary home, we should tackle the rental property then. Correct. What if the primary mortgage is a lot bigger than the rental property? Do we reverse the order or just stick to the method? Okay, so when we say three to six months of expenses for your emergency fund, does that include giving and tithing? Yes, sir.

Are you talking about just tithing 10% while you're paying off debt? No, no, no. He said when you're calculating your expenses. I have three months, three times my monthly expenses or six times my monthly expenses. Do my monthly expenses in that calculation necessarily create a tithe? I mean, does a tithe need to be in that? My answer is, Jason, it doesn't matter because that's 10%. It's not going to

move the needle that much you're going to round up anyway so if you say oh my expenses are four thousand dollars four thousand four hundred dollars does not move this you know you're you know go twelve thousand go fifteen thousand dollars for your emergency fund if you're or you know or twenty thousand if you're you're not going to go right to the penny like exactly three times your monthly expenses so 10 added to your monthly expenses for this multiple doesn't move the math that much it's a great question though that's i don't think i've ever had that question here's the thing if if the emergency that you're using is a job loss you're not going to have an income so a tithe would not be calculated a tithe

increase is based on your income it's based on your net increase of your life, okay? And so if the emergency was a job loss, if the emergency was a transmission going out, or you need to buy an airline ticket because someone across the country had passed away and you're going to the funeral or something like that, then obviously, you know, you would have that. But if it involves your income stopping, then the tithe would stop. So, you know, if you really want to get nitsy about it, but really you're just you need to round up anyway. Just OK. My expenses are thirty four hundred and sixty two dollars.

Well, four thousand bucks. I mean, my gosh, times four or times five or times three or six or whatever. Right. And try to figure out there what that's going to be when you doing it exactly. Yeah, and you're tithing on your increase. So yeah, if you're stopping to use your emergency fund, you're not getting an income at that point. It's not tithing on what is going up in your account. So you would have already tithed on that money, tithed when it came into your house, and then it's now in your emergency fund. So that money has been tithed on. Now, if you, donating to a nonprofit or a church or something that you really want to keep giving to, maybe you do factor that

in, like Dave said. But technically, if you're getting into the technical part, you've already typed on that money. It's not enough to matter. So the second thing is, when do I pay off a, do I pay off the, my home first or the rental first if my home is a whole lot more when I get to baby step six. Yeah, I mean, I would pay off the rental if it's a small. I run into people who got $50,000 out on their rental, $500,000 out on their house. We'll go ahead and knock the rental out. You know, that's fine. But if they're close to equal, we'll put the house in front. Well, I'm a little bit curious about your situation. You mentioned you're in baby steps two and three.

They're pretty different baby steps. So you have debt. What kind of debt do you have? Well, I've already got rid of him. But yeah, he's in baby step two. He's not in three. You can't be in three and two at the same time. That's what I'm getting at.

And potentially, it may make sense in baby step two for him to go ahead and sell that rental. If he's got a lot of other debt and got some equity in that rental, that may give you the opportunity to. If you can't clear your baby step two debt very, very quickly, you do need to look at that. That's a good point. And you may want to look at it to clear your home mortgage. Right. If you've got a bunch of equity in it. But again, sometimes you have a $60,000 house you owe 20 on and that's the rental.

And it's not going to really move the needle much in the overall situation. And then you owe half a million on the house or something. That's the situation where we just knock the rental out. Well, and just as a new listener, it is important to realize when you're in baby steps one through three, those are different baby steps. When we get to four through six, we often kind of lump them together. They're things that you're doing at the same time. But when you're in baby step two, you are laser focused on paying off your debt. Yeah, you're only in two.

You don't do anything except two when you're in two. Exactly. Good point. Bill is in New York. Hi, Bill. Welcome to the Ramsey Show. Yes, hello. Thank you for taking my call.

I have a recovering alcoholic son. He's 35 years old, and he's working hard now. He's back on his feet, and's really uh hell-bent on you know recovering his life and getting back to what he had what he was doing before um and i'm looking at a way to potentially help him i haven't talked to him about this yet um it's just something i want to discuss with you and get your opinion on but basically he's working real hard and he's doing he's doing well but he's trying to get back to the income level that he had before he crashed and burned before the pandemic. He was making $130,000 in a company job.

He lost that job and he's not trying to recover. He loves helping people and he loves tutoring. He's trying to start an online tutoring business now and he's starting to get some traction, but it's still early days. So one of the questions I have for you is I have very high net worth. I'm retired. I got more money than I could ever use. I want to give back to the community. So what I was thinking is, is at some point, would it, would it be, what do you think of the idea that I actually start a nonprofit tutoring

company and he, he runs it. He actually, you know, he gets the salary from it. He does the tutoring. But essentially, I am basically funding him to do this nonprofit tutoring. It's what he loves to do. It will give him income, and I get to basically give back to the community my wealth. What do you think of that? I love where you are with your dad's heart

and how proud you are of him turning this around. And I'm proud of him, too, just from hearing it through your voice of him. He's fighting hard. He's scratching and clawing to get back on his feet. Conceptually, aside from the recovering from an addiction part, your idea is not a bad idea, and i'd probably look at doing it um what i do want to do is i want you to meet with his counselor and um maybe even his sponsor if he's doing aa with his permission is the only way you can do that and talk to them about this because what we don't want to do what he's doing as he's recovering and you're watching him do this with great pride, and I am too, but what he's doing is he's building life muscles.

Right. And the strain of rebuilding is building the muscles. And if we take the strain away, we might take his muscle buildup away. Yes. If we make this recovery too easy right does that make sense i mean is it the old thing of the catapult if you if you see a caterpillar and he's trying to become a butterfly and you open it up well it was the strain of busting out of the cocoon that made the butterfly's wings work and if you open the cocoon up the butterfly just dies it can't fly

because he didn't have the strain to grow the muscle with and there's a horrible thing as a dad to be watching him strain and watching him recover from his bad choices and all that but those are the very things that are going to make him the man he's going to be going forward once he's that man or if he's the other side of the apex of that strain according to his counselor or his sponsor then i would probably yes i would do this but if it's just to make life easy for him that's starts to look like enabling a little bit yeah no i was thinking of waiting a year or two okay how he does oh that that makes a lot more sense then yeah that changes the equation you see but that's my only concern when we work with a lot of addicts and recovering addicts because 100% of them have financial problems.

So, you know, I mean, cocaine doesn't work. It's just expensive. And so, you know, we work with them all the time. So we get the benefit of seeing people transform their lives right before us like that butterfly. And so I can feel it in you, man. I can feel pride coming off of you, Bill. I'm proud for you, and I'm proud for him. But yeah, once he's healed, yes, I would do that.

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