The Ramsey Show - App - Stick to the Plan Even When It’s Tough

Episode Date: April 16, 2025

Live from the headquarters of Ramsey Solutions, it's the Ramsey Show. We help people build wealth, do work that they love, and create actual amazing relationships. Jade Wachow, Ramsey Personality, is my co-host today. Thank you for joining us, America. We're glad you are here. The phone number is 888-825-5225. You jump in and we'll talk to you. Abigail's in Portland Oregon hey Abigail

how are you good morning Jaden day so it's such a pleasure to talk with you thank you so much sure how can we help well I am 70 and working a great deal trying very hard to make it possible to retire by 80. Um, recently, so this last year I've had two offers from a company that, uh, if I followed those, they would probably make it possible for me to retire, um, within a few years. Uh, but I, I feel a need to really being

and company and i'm not sure how to call about that to be real carol and making sure i'm not going to get myself into a big pickle uh... another thing is that my husband but never approved of him but he's in very poor health and and i think that the lifelong what are we talking about what are we talking about but he's in very poor health and doesn't expect to live long. What are we talking about? What are we talking about?

This is a company that establishes solar farms, um, across the nation and they pay a good rate of rent for your acreage and they install. And, uh, and you had two different offers? From the same company. Okay. And basically they want to lease the land for 15 years, right? For 30 to 40 years. 30 to 40 years. Okay. I've looked at these deals, I've had some friends that had some I've looked at these deals, I've had some friends that had some that were a little bit older than you, and the only question in the deal is twofold.

Number one, you've got to make sure the company is solvent and in the event of that they're strong financially in other words, in the event they go bankrupt, obviously this lease is canceled and then you've got a bunch of junk on your farm. Yes. Okay, that's gotta be hauled off. It's very expensive to get rid of it. And so you've gotta make sure this company's got

30 years worth of staying power financially. You're probably not gonna be here 30 years. I doubt I'm living to 110, but you might, but you're leaving this mess for your heirs then. And my friend that was in their 80s was talking to their kids about what their kids wanted to do, because it really would only affect the 80-year-old period of time right and the kids would have then have the issue with the family farm having a solar farm on it so why would your husband not do it he loves his farmland okay this is simple okay the other downside is that you

basically can do nothing with your piece of ground. It now has a lean against it. I mean, you could sell it, but it's still encumbered by this lease. It's a lean on the property. Yes. And so if someone wanted to buy it, they'd have to accept the lease as part of the equation. Yes. And so that's how our friend decided not to do it because he didn't want the farm tied up for the kids. What is the land worth? Currently, about three million.

And how many acres are there? It would be 45 acres. And how many, and what are they offering you? And how much of it are they going to tie up? It would be most of it, oh but about six acres. Wow. Well it would be 45, we would be renting. But it would be about four million over 40 years.

You know what, you're not going to like my answer but I wouldn't tie up a three million dollar asset for that and have my whole backyard full of this. I would instead I would sell some of it. Well thank you for that. That has been a consideration. I would instead I would sell some of it. Well, thank you for that. That has been a consideration. I would sell 10 acres and use that money to live off of. Yes, and we could do that. And it's also something my husband is not eager to do.

I'm sure he would not wanna do either of these things, but that's emotional. And we're talking about how you're gonna eat, which is what you're worried about. You're working at 70 years old're talking about how you're gonna eat, which is what you're worried about. You're working at 70 years old, worried about how you're gonna eat at 80. Yeah. And so, your husband didn't save enough money

when he was young and working to provide for his wife's food. And so we're gonna sell some of his land to do that. I'm sorry, that sounds cold, but I mean, that's the way my mind works okay and so yeah I'm gonna pick out how I can carve off and make a million and a half on ten of the 45 acres that are maybe some premium a premium cut of the 45 right and you just got to decide how you're gonna parcel that out in Portland Oregon and I'm gonna start talking to a real estate agent about subdividing this and how I can where I can drop a line with a

surveyor and I'm gonna do that to eat with and you still get to live in the place you still got 35 acres which is very nice and if you do it the way that he wants it if you do it properly you get to configure which 35 it is right but we've got to get enough out of the other to sit down with an investment broker and create an account and if you did it right you probably could get a million and a half if the whole thing's worth three I bet you can sell a third a fourth of it for a million and a half I bet you could and then you think about in the future when her heirs get it what it's appreciated to and now they don't

Have to deal with the red tape of having that yeah solar lease on there. Yeah it the problem With again her situation and the situation I looked at was the same one was not as much the next 10 years It was the following 20 years. Oh, that's a long time. Yeah, it's a grant It's a ground lease. You can do long term ground leases in commercial real estate. It's not a scam. It's an actual offer. The one thing we do know about solar is its technology.

I can tell you this. You know what a 20 year old solar panel is? Useless. Useless. Because the technology has advanced dramatically in the last 20 years. And so what you've got is, you know, you've got something the size of a tractor trailer that's doing what something that would, the size of a car would now do. Right? Right, right, right. And so, um... And they've got to dispose of that and...

And it's, it's, you know, it's a big old bunch of junk to haul off. Holy smoke. And yet we bought it thinking, oh, we're going to make all this money over all these years when people are buying solar. Now, you can buy solar. There's nothing wrong with buying solar. I don't have a problem with that. This is a different discussion here. This is people leasing her land.

And then what they do is they sell it to the local, they sell the electricity that's created to the local utility. Interesting. And that's where they make their money back. Yeah. It just didn't feel like a fair deal. Four million over 40 years for a piece that's worth three million today felt I'd want more. At the very least I'd want more money out of the deal. Well you still own the ground but you can't do anything with it. That's what I'm saying. So at that

point, like you said, it's kind of useless at that point. Yeah, exactly. It's the lean against this. Interesting discussion. I've not had that on the air before. I did have it obviously off air one time. This is the Ramsey Show. Well, look who's in the house. Brian Baffini. One of the nation's top business experts, founder of Baffini & Company based in Carlsbad, California. The firm is dedicated to sharing the powerful message of lead generation systems. Primarily started out in the real estate world. Brian and I met each other probably 20 years ago. He's a New York Times best-selling author and speaks for us regularly and Entree Leadership.

He'll be coming back with us in 26, and was in town doing some other stuff, came over and did our staff devotional this morning and owned it again. Absolutely fabulous. Welcome back, my friend. Thanks for having me. Great to be back. Absolutely. So the ones that don't know the story, you came here from Ireland in the 80s and you got this classic American dream rich story with a rags to riches being a legal immigrant yes and is that still possible now yeah I'd say more possible now than ever why is that well you know I have six kids so I they get this seminar all the time I you know

I think if you don't have a sense of entitlement, a group not having much, have appreciation for the opportunity and you get to see the opportunity, fish discovers water last. And here's the other thing, and again, if you ask people like myself who are immigrants to America,

they're the most fanatical Americans. I became American by choice, not by birth. My kids are in military and so on and so forth. But I'll say this, I'd say the work ethic in the United States is not what it was 35 years ago, 40 years ago when I came. Money is more available than it ever was. And so I think money's available,

your competition's not working that hard, people are a little bit of entitled. And I'll say this, if I was 19 years of age and I happened to get hit by a car like I did in 1986, I think I could build my fortune in half the time. Wow. Why? Because there's just not any competition

because you can't work on it? The opportunity is more than ever. The opportunity, the American economy, business is so much bigger. There's so much bigger markets than ever before. You don't need, you know, with social media and the things that you can do to market and advertise yourself now, you can go so much bigger, there's so much bigger markets than ever before. You don't need, you know, with social media and the things that you can do to market and advertise yourself now, you can go so much faster.

You know, Dave, you building your brand today, compared to building your brand when you started out, you know. There was no internet when we started. There was no internet. Same thing. And then capital is available when needed for certain things.

So I just think that, and I do think a little bit, and again, that's why a little bit of adversity would be helpful to America, is folks want to, they want easy, quick, millionaire overnights. That's why internet gambling is huge now, Bitcoin is big now, I want success, I want it now. And I think one of the things about immigrants

is you had to sacrifice to come here. That's right. I mean, I just left, my mom just passed last week, you know, you had to leave your family and you have to come, you had to pay a sacrifice to come here. That's right. I mean, I just left, my mom just passed last week. You know, you had to leave your family and you have to come, you had to pay a price to get here. You guys teach delayed gratification. There's a reason you have a big market because it's a foreign concept.

So there's like a level of skin in the game that you're saying. I was reading a couple of statistics and it was something like one in three US millionaires are immigrants. At one point, like over 48% on the Forbes 500 were immigrant run companies, first born or child of an immigrant.

So you're saying that skin in the game and coming from a sense of, not approaching it from a sense of entitlement, you think that's the? I wrote a book about it. I'll give you seven principles in 30 seconds. Number one is a voracious openness to learn. And number two is a do whatever takes mindset. Number three is a voracious openness to learn. And number two is a do whatever takes mindset.

Number three is a willingness to outwork others. We just talked about it. Number four is a heartfelt spirit of gratitude. Immigrants are very thankful to America and thankful for the opportunity, thankful to their customers. When was the last time somebody said that to you? Thanks for your business.

They're willing to invest. They're willing to delay gratification and they always remember where they came from. And I think if you can always remember where you come from, it gives you a great perspective. Dave has his old car on display here. We used to sell stuff out the back of the car. It's right when you come into the lobby. Never forgets where he came from. Don't despise humble beginnings. Yes, sir.

That's it. The stats are, the data that we have says if you come to the country legally, you are four times more likely to become a millionaire than someone born here. Yeah, and it's a touchy subject, right? Those are the reasons. It's a touchy subject, and that's why the legal immigration route is a sacrifice. If people come here for entitlement programs, you've destroyed the very reason to be an immigrant. Wow.

You actually take away all of the seven gifts you have. You take away that. We proved it in Ireland. Ireland, we had 450,000 Eastern Europeans come to Ireland in the mid, early 2000s. And when Ireland got into trouble and had to do an austerity program, cut back all the programs,

450,000 people left the country. So they didn't come to contribute, they came to take. You have to be willing to come and make your own. You have to be willing to come and make a name for yourself, make a business for yourself, make a life for yourself. And you know, what's interesting, the Americans that I run around with anyway, do not resent that immigrant.

They don't resent the one that came here to add value. They don't resent the one that comes here legally. I don't hear that at all. And so it's not a racism thing and it's not a, you know, I just hate people that don't, that weren't born in America thing at all. Because America is the land of immigrants, for sure. It does a terrible disservice to people.

If you take away the very essence of being an immigrant, it does a terrible disservice. So the podcast, the Brown Buffini podcast, we're talking about New York Times bestselling author Brown Buffini today, is called It's a Good Life. Be sure and check it out. So what's been your experience doing a podcast? Because you're a speaker, a coach, extraordinaire,

and then you sit down behind a microphone like this now. Yeah, well it's a little different. You know, like when I wrote a book, I found out as a writer I'm a great speaker. And then I found out when I was on TV I got a face for radio. Yeah, exactly. And you know, just because you can buy a microphone doesn't make you a broadcaster, you know. That's true. And being Dave Ramsey is not as easy as people think. You know, here's what I do, I get a chance to interview people I'm really interested in and ask them things I had you on today and I asked you as a business mentor of mine as you have then I got to ask you some questions that helped me in my business today

I got a couple hundred employees. I got to take care of I got a pretty good business going and you know, so I get a chance to meet some fabulous people and Ask them their stories and you hear some wild stuff, you know the largest and most successful coaching company in America today coaching real estate agents, by far, not even a close second. I grew up in the real estate business. And so one of the things I've been asked lately,

and I was asked this the other day on a podcast that I was a guest on, is Gen Z feels like they can't buy a house. Millennials too. Yeah, and some millennials feel like they can't buy a house. Millennials too. Yeah, and some Millennials feel like they can't. Talk about that, because you're square in the middle of it. I'm square in the middle of it and we have some research and I have access to some stuff that isn't really out there in the marketplace today. You know,

how old were you when you bought your first house? 22. 36. Great, 36. Great. That's the world we live in. So I'd give you two words for the real estate business today. Older and richer. Older and richer. That's who the clients are. Average age of a first-time buyer,

three years ago it was 32, today it's 38. They're putting off getting married, having kids and having families. Very destructive to the culture. The average age of a seller is 63. So it's older and richer. And it needs to shift. And Scott Turner's the new Secretary of Housing and Development, good friend of mine,

played for the Chargers, and I'm meeting with him at the end of the month to try to help in this regard. We've gotta create programs to get younger people in the game. But also, younger people gotta be willing to do what it takes, and it's this,

you gotta be willing to fight for it. You gotta be willing to sacrifice it. Are you willing to do a side hustle? Are you willing to do a side hustle? Are you willing to save every dime on that side hustle, invest it, grow it? Are you willing to fight for it? It's gotta be that important to you.

I think what needs to happen is people need to understand the value, what it means to a family and a culture and a community when you're a homeowner. And so are you willing to fight for it? Will it delay gratification? You want to move a little further out of town to get a start? You know, are you willing to have some difficulty in doing it? Are you willing to not have to go out with your buddies and or take the trips? Are you willing to go, okay, you know, it's ramen. You know, when I bought my, I bought a house, I bought a first house, then I sold it,

then bought a second one, bought a third one. Third house, nice big home. We had three empty rooms of no furniture for two years. I understand that. The kids could play and they could roll and do whatever, and guess what? Dad invested, Dad grew, and then eventually Mom could have all the furniture she wanted.

Dude, I was a teenager before we had living room furniture. Yeah. Yeah. And that was a thousand square we had living room furniture. Yeah. And that was a thousand square foot with an unfinished basement. Yeah. You're playing ball in the house. I hadn't even thought about that. You said that.

Yeah. It didn't bother us. I didn't need counseling because of it. It's true though. You have to be willing to do what it takes to get the real estate. My husband and I rented for 10 years so that we could afford and save up in order to do that.

So you're right. It's still attainable. Just have to do what it takes. Yeah, you were in the process of seven years and $465,000 in debt would be paid off. So that's what kicked the can on that. Can I tell one story before we go? Now we're tight on time.

Yep. My mom just passed, as you know, thank you for the flowers from you and Sharon. My mom and dad were engaged for seven years. Back in the day, okay? Gonna be promised to be pure one another, whatever. Seven years they were engaged. They wouldn't get married until they could buy a house. Wow. There it is. Brian Bufini, ladies and gentlemen, check him out. It's a good life

is the podcast and you can follow him at Brian B-U-F-F-I-N-I. Brian Bufini. Thank you, my friend. Thank you, guys. Buffini. Thank you my friend. Thank you guys. James is in Miami. Hi James, welcome to the Ramsey Show. Hi, thank you. So I just had, I just was wondering if I could get some advice. So I'm about to finish school and me and my fiance are currently going to be about $700,000 in debt and now that I'm good you know Lord I'm starting to get a little little worried I'm worried and I just met you um what are you who's the doctor who's the lawyer so I am finishing law school here tomorrow actually, and my girlfriend is in her third

year of medical school. Oh my gosh. Both of you, okay. So you're not done, like for her she still has schooling to go and this could even get greater, right? So these are the, so her debt is what it will be at the end. Okay. Her debt currently is less, That calculation is with her end.

When are you supposed to get married? We are planning to get married next May. Okay, and well, we don't do anything together until we're together, number one. I mean, we could talk about it, which is fine. I don't mind planning for what we're going to do, and that's very wise on your part. But you're graduating now Yes, sir, and you're gonna sit for the bar this summer Yes, sir in July. Okay. Good and she graduates when

It's going to be 2026 or 2027, okay two years Yes, sir. Okay, When is there the opportunity to start making money and what do you think you'll come in at? So you know, God willing, I will pass the July bar and September is when I would get those results. I have already signed a contract with a firm for a hundred and fifty thousand. Okay, that's good. Okay. And her income obviously during residency they don't pay them very well. She's gonna be coming in about fifty

five, sixty thousand a year. And she's in residency now right? Third year. I'm sorry? She's in her third year. Okay. She's in her third year of school. She'll be in residency in two years. So it'll just be my income for the next two years. Okay and then she'll have 50. So you're going to go 150, 200 and then when she gets out hopefully 400. Yes sir. Yeah okay. Well obviously those are the numbers, the income numbers are what we're gonna use to clear up these 750, I can't breathe, thousand dollars. So, here's the big, I mean, if you said, okay, we're gonna live like two college students until this is paid back, you're gonna have it paid back

fairly quickly after she graduates. That is, that's the goal. And one of the questions I was wanting, so, you know know out of that seven hundred thousand three hundred fifty a thousand of that is the student loan the other three hundred fifty thousand is the mortgage that I have on a property that we live in. Oh so three hundred fifty thousand in student loans. I'm feeling much better now but not that much better. It's three hundred and fifty thousand in student loans and 350,000 in a mortgage that we have about.

When did you buy this? So I bought this at the beginning of law school. Oh boy. How have you paid for it? Um, I've been working and, uh, living off of student loans. Oh, you've been paying for the house on student loans? Yeah. So, the rental market down here when I came to law school.

What's the house worth, James? The house is worth currently around 390, 400,000 dollars. Sell it. Oh, so you don't, you owe almost on it what it's worth and you've owned it three years? So you don't, you don't, you owe almost on it what it's worth and you've owned it three years? Um, no, I, I mean, so the way I, I, the loan is not through a bank. It is through a family member.

Um, and they deferred my mortgage for the three years that I was in mall school. So I have not collected any interest nor have I made any payments on the property. But the property's not gone up in value while you've owned it for three years? Yes sir, it's gone up about forty five. Nothing. Okay. So I'm shocked. How easily can you get out of this? Like what's this is it sell it like a normal property? What's the terms of this? You can sell it and pay off the family member now, right? Yes, sir. Okay. Yeah, do that.

You can't have a house right now. Yes. You have no income, you've got $350,000 of debt. And here, do you wanna know where my mind goes? In July, when you have to sit for the bar and you realize the stress and the pressure that's gonna be on you, do you see what I'm saying?

That plays into how you're going to test. It plays into everything. So if I'm in your shoes, I'm trying to offload half of this debt immediately so I can go sit for this bar and realize that I can have, do you see what I'm saying? And alleviate some of that pressure along with some of the debt because this is a scary situation. Get you a one-bedroom apartment, dude,

and eat beans and rice and go to law, and go to work as a lawyer, making $150 and start cleaning up the remaining debt. We just got rid of half of it by selling it off. And you're not gonna do that, because you still think this is a good idea, but you called the wrong show, because we love you enough to tell you the truth.

It was not a good idea. And, um, you know, and whoever your relative is, is helped you step into a bear trap and, um, and bear traps, take your leg off. They're not, they're not for playing. And so you need to get, you're not going to do it, but what you should do mathematically and the fastest way for you and your fiance to become wealthy is for you to live on nothing, get a tiny little studio apartment and that's cost nothing there in Fort Lauderdale.

And then go, and you don't need to live in downtown freaking Miami Beach, you can't afford it. And so get out there in the burbs and get you a deal and then work your tail off and live like a college student sitting on a bean bag with concrete blocks for your law books and boards between them and you know and whatever living like a college student looks like in your mind but not the college you went, not the way you've been going. No, not a luxury college. And then you clean up as much of your debt as you can before you all get married and before she

graduates and the instant she graduates and her kicks in if yours isn't gone yet then you use her additional income and you all are married to at that point to combine everything and attack them in this order. But you should be if you'll do all of that, you could be 100% debt free in three and a half years from today, including her graduating two years from now. Dave, talk about this for a minute, because I think it's worth it. So here we offer a benefit called Smart Dollar. You can have it in your business.

But the point of it is the stress that you feel in your life when you have student loans, when you have debt, the stress that it takes on you life when you have student loans, when you have debt, the stress that it takes on you working at your job and your career. You were the one sitting with $200,000 worth of it. You know what the stress feels like. I do, but I feel like people forget about that.

I feel like people forget about the toll that it takes on you to perform every single day and to show up as the person that you wanna be, because without knowing it, your debt drives you to make decisions that you would not normally make. It drives you to choose a job that you want to be, because without knowing it, your debt drives you to make decisions that you would not normally make. It drives you to choose a job that you might not have normally taken.

It drives you to do all of these things because it is now the number one factor. I have to pay off this debt. To sit for a bar with $700,000 of debt weighing on your shoulders and think that you're gonna perform the way you would have if you didn't have that debt. Like these are the things that we've gotta think about

when we make these decisions. And James, I'm gonna insult you now also, potentially. So hold on. In 35 years of doing what I do, the hardest people to convince to use common sense are the smart people. to convince to use common sense are the smart people. And lawyers and doctors, the level of arrogance that comes with that often that I think I'm smart, I'm in the top echelon of the society and the rules don't apply to me, they apply to you son. You are a broke freaking lawyer that is way over leveraged and you ain't

even a lawyer yet. So act like it. Some humility to approach this table of common sense is necessary and it's the hardest group of people I have to talk into it. And medical doctors out there, I'll go ahead and make you guys pissed too while I'm at it. You're not even in the top five category of millionaires. The top five, you're number six on the list of people that become millionaires because medical doctors are about as notorious as people in the music business or the acting world for being stupid with money. Only they add a level of arrogance to it because they're so freaking smart. And so don't be too smart for your own good is my point.

And if you're not, then you can end up with a lot of money here son. When you're 30 years old, you guys are going to be very wealthy if you'll go through and follow through on what we're saying. But I don't know if I got you or not. I don't have any idea. This is The Ramsey Show. Jade Washaw, Ramsey personality is my co-host today. Thanks for hanging out with us America. Let's face it, our money and relationships work together to help us win or they work against us, cause us to lose. You don't have to stay stuck in

this area. I'm going out with Dr. John Delaney on a six city tour. We're going to do the money and relationships tour in this coming Monday. I'm going to be, we are going to be in Louisville, Kentucky, April the 21st. Durham, a week from today, April the 23rd on Wednesday. Atlanta, week from Friday, April the 25th, Phoenix May 5th, Fort Worth May 7th, and Kansas City May 9th. Tour starts next week. Kansas City and Fort Worth are almost sold out. Do not wait. Get your tickets right now and go to ramsaysolutions.com slash tour or click the link in your show notes either way Spencer's with us in Dallas, Texas Hi Spencer. How are you?

Doing great. Hi, Dave. Hi, Jay. Thanks for having me on hope you're doing well Got a got a question for you So I'm currently on step two and expect to make it through step four within the next 12 to 15 months But right I'm But I'm looking, I'm looking ahead here and I've got kind of a unique mortgage situation and that's kind of what I'm wondering and kind of wanting some insight on. So about four and a half years ago, my in-laws helped us purchase a house and essentially bought the house for us

and they're our lender. And so we pay them a mortgage every month, which doesn't include any type of escrow or anything like that. But I set up the payment based on what we could afford and we're never going to pay it off. And my in-laws have had that conversation with us and they're, they're in their late seventies now. So it's basically going to get folded into, you know, some sort of inheritance. Is it in my best interest to essentially avoid

set six in this situation? I'm, I'm a little conflicted because it's not really in our best interest. So what do you owe your in-laws? So we owe them 348 to,296 right now. And they have no intention of receiving that from you before their death? No, not at all. And what's the size of their estate? I don't know that exactly. I've never had that conversation.

Well, millions or tens of millions? It's I would venture it's probably in the millions. I mean he retired in his late 50s. And how many siblings does your wife have? She has one sister, older sister. Okay. My suggestion is you all quit pretending that this is a mortgage. All of you. And so what I would do is sit down with them and say look we need to restructure this, okay. We either need to go get a mortgage and pay you all off and then we'll get the money of course when you pass away as an inheritance or you guys can just take advance us her a portion of my wife's inheritance by just forgiving this loan

Of course That's what should happen about but it's certainly an awkward situation to have you know, no one ever wants to have that conversation Yeah, I don't want to have it but y'all all signed up for this awkwardness And it makes sense It feels presumptuous like to go in and say that I understand that but it does make sense I'll sign up for this awkwardness. And it makes sense. It feels presumptuous like to go in and say that I understand that, but it does make sense and if they're logical people I feel like they would understand that. And they can do that with what's called the Unified Estate Tax Credit file, a one

piece of paper with their tax return. There'll be no gift tax on it and then just your wife's portion of the estate is reduced by 350,000 bucks. And then you have a free and clear house and we have jumped ahead to baby step seven. Of course. Which is a wonderful gift. And then you guys say, we promise to pay, they put the equivalent of house payments into investments so that your grandchildren are multimillionaires. That is the goal. That's what you would tell the parents. You tell them their grandkids are going to be

multimillionaires because we're gonna pay a house payment and then some into investments almost immediately. Because you guys are just pretending. This is not a real mortgage, it's a form of denial. Exactly, no it is. just pretending. It's not a real mortgage, it's a form of denial. Exactly. No, it is. It's kind of an oddball situation. I'm not sure how often you've counseled somebody in this type of situation. I've counseled them plenty of times where they had a regular mortgage with the in-laws,

which is a mistake too, because it changes the flavor of Thanksgiving dinner. Have you noticed? The borrower is slave to the lender and it's weird and it's awkward. And now every time I'm looking at my father-in-law, I'm looking at my master, not just my father-in-law. And it's weird. I borrowed money from Sharon's dad one time when we were broke and he's the sweetest,

nicest guy possibly to ever live. He is a sweet man. And I felt like dirt drug into the floor every time I walked in that house until I got that thing paid. He never said an unkind word. He never rolled his eyes. He never, but I felt like poop.

Same. And it's just awful. I've been there. That's so true. It just, I mean, and Sharon, she didn't care. It was her daddy. It didn't bother her. I was the only one with my panties in a while. You know what I mean? It It just, and Sharon, she didn't care, it was her daddy, it didn't bother her. I was the only one with my panties in a while.

You know, I mean, it was just, my God, I felt awful. And so y'all, you know, and that's kinda, he's being pretty chill about it, but he's got a little bit of that going on. So yeah. He can't avoid it. I would say, look, I would say this is an awkward conversation, mom and dad.

I wanna have it because the plan is for us to never pay it off. So let's just change the structure of it and reduce the thing and go ahead and release the lien and make it a gift, an advance gift against her portion of the inheritance. And she needs to lead that conversation, no? I agree. I agree.

I agree, but you need to be sitting there too. And mom and dad, look, it's silly because you don't ever expect to get the money. So since you're never going to get the money, we don't have a plan to get out of debt. We have to wait on you to die to be debt free. And we don't want to do that. So we're either going to get a mortgage and pay it off ourselves. Yes. Or we're going to pay you guys off, or you're going to forgive it. So what do y'all want to do? Because this thing that we're going to pay a payment that's not enough to do anything and I'm just stuck like a rat in a wheel. No thank you. Yeah, it's a mess. Our question of the day is brought to you by WhyRefi. WhyRefi refinances defaulted private student loans which are different than federal student loans and it means you can't even make the required payments. If that describes you, contact YREFY for a low fixed rate loan customized for you. YREFY.com slash Ramsey. That's the letter Y. R-E-F-Y dot com slash Ramsey might not be in all states. Okay, in honor of Financial Literacy Month, today's

question comes from Ava at Agape Christian School. She says, is it necessary at some point to get a credit card? My mom says it is, but I want to think otherwise. Well, you are very wise, Ava, to want to think otherwise. Yeah, it's not necessary, and it's not wise, really, to get a credit card. If you're getting a credit card, you're probably doing it for one of three reasons.

You're doing it A, because you think you're gonna build credit. B, you're doing it because you have no money and you're relying on credit cards to fill the gap. Or C, you've convinced yourself that the points are worth it. And so my guess is that you're probably thinking about building credit.

And I would tell you that- Or your mom is. Yeah, your mom is. And the truth is, people don't talk about it enough. We're some of the only ones out here saying that you don't need credit to get through life. You can get through life just with the cash that you earn from your income.

And a lot of times people fall back on, well, how are you supposed to get an apartment? How do you get a car? How do you get a house? Those are the three things that people are looking at. And the truth is, you can't have an apartment without a credit score. Not a big deal.

Most of them will take you. Most of them, yeah. If one doesn't take you, you go to the next one. Obviously, when it comes to buying a car, we would say the best way to do that is to save up and pay cash. The first car that you buy is probably gonna be- The only way to do that.

Yeah, what did I say? Best. Oh, the only. Yeah, Dave got me on that. The only way. Yeah, your first car is probably gonna be a junker. Maybe you pay $5,000 for it, but you save up and you trade it in

and you add cash with it every time. And before you know it, you're gonna to be driving the car that you want to be driving. And then of course, with the house, uh, Ava, we suggest manual underwriting. Okay. And that's just them looking at your actual income to decide if you can borrow this money. And they're looking at things like trade lines and they're looking at things like your income, your actual money. And so that's how that works. I say all the time, credit, it's a product.

It's something that's being sold to you and people benefit from that. What we're teaching, the only person that really benefits from it is you. It is for you. We don't get paid because we tell you to live a life with a zero credit score. So that's one good way to sniff it out.

Only one reason to have a credit score. Borrow money. If you don't want to borrow money, you don't need a credit score. Pretty simple. This is The Ramsey Show. Live from the headquarters of Ramsey Solutions, it's The Ramsey Show. Where we help people build wealth, do work that they love and create

actual amazing relationships. Jade Waschall, Ramsey personality, number one bestselling author is my co-host today. Chris is in Cincinnati. Hey Chris, welcome to the Ramsey Show. Hi, Dave and Jade, how's it going? Better than we deserve. What's up? Yeah so I'm just giving you guys a call just because I'm trying to follow your plan I've been listening for a few months and it's just at a point

where I'm in baby step one and my wife and I were making more money than we ever have but our expenses keep going up and And we just seem, I can't get to the point where I'm able to, you know, build an emergency fund up and even start to pay down debt more than just the minimum payments, which are a lot right now. What's causing your expenses to go up without you? Well, yeah. So we just had to start paying for childcare full time because I worked full time during the day and work a variable schedule and

so does my wife it's very on demand and so if that's about $2,068 a month and Yes, yeah two girls and I'm just having to two girls and I'm just having to pay for that and our minimum payments are large and they're cutting into our debt because a lot of them are like 0% so low APR because of my payment plans. What's your housing?

What are you paying every month for housing? $500 a month. I live with my aunt and uncle and they have some health issues so we do that for them. They help us out. It's a good thing. Okay, so what's your income then? My wife and I, we make about $103,000 a year gross between us two.

And how much debt do you have? About $96,000 in debt. On what? So we got about $30,000 on one car, 17 on another, and about 25 in student loans and about a few card debts, probably about 10,000 in credit card debt and about 12,000 in personal loans. You're going to speak directly into your phone. It sounds like you dropped into a barrel.

Sorry about that. It was about $12,000 in personal loans and about $10,000 in credit card debt. OK. How long y'all been married? We've been married since August of 2020. So it's about, um. So you made most of this mess in five years.

Yeah. We made some dumb decisions that I'll own, buying a new car. Yeah, you just listed them. Yeah, the cars are the biggest problem I see. The $30,000 car, what's it worth? It's worth about $23,000. I'm upside down, but I know wonderful things like sell the car, get a personal loan to pay off the negative equity, but the problem I have is my job, I have to drive my own car and I have to drive around and it has to be like, some of them are liable so I can't like, get a beater.

You don't think they make cars less than $30,000 that are reliable? No, I'm saying they do, but my credit is also really bad where it's hard for me to get a proof of personal loan yeah okay that's a that's a different issue but yeah who's the thirty thousand dollar loan with General Electric okay and you also called us and said you're stuck so you're gonna have to do something or greed yeah and what is your are you guys putting money in retirement? No, we stopped doing that. Okay. When? Probably about a couple months ago. I was only contributing about 3%.

What's your tax return going to be this year? Last year it was like $4,500, but this year I'm trying to lower that. So I'm hoping. So you got a $4,500 check coming? No, it already came. year I'm trying to lower that so I'm hoping. So you got a $4,500 check coming? No, it already came. We already filed and got that. Yeah and you've adjusted your W-2 by $400 a month right? Yes, I've adjusted mine. You've already done? Yes, I already adjusted it. Okay, that's good. How much do you have in savings? None? No, we have nothing.

Okay. And what kind of work does your wife do? She's an assistant general manager at a fast food restaurant. Okay. And so most of the income is on your end end like split up your income so I can see Yeah, it's pretty split. I make about 45 a year and her income is about 50 about 58 thousand a year So she makes more and what kind you said you drive for you? What kind of work is it? What is it? I work in fire protection. So it's a lot of driving to job sites doing inspections service calls

I'll eventually have a van where I won't be on my personal vehicle, but. Are they reimbursing you for the use of your car? I'm only getting about $5 for every 25 miles. It's not a lot. So it doesn't, it just gives me my money back. No, it doesn't. Your, your fuel, your fuel is more than that. I've talked to them about that before, but they just say, you know, that's just a tax money. I don't think these are your long-term career tracks, am I right?

Well, I'm working at a very small company right now, and there's potential to eventually be in management and to own it and help it grow beyond where it's at now over time. And that's what you wanna do? Or that's just the opportunity in front of you? I like what I'm doing. I don't know if it's gonna work out with this employer

for the majority of the time, but I enjoy the work I do. Yeah, you get to use your own car and we don't pay you enough and the answer's tough. I'm not excited about your employer. Yeah, I see, I like to be able to see opportunity for growth or at least opportunity to side hustle, opportunity to expand your income

because it's two pieces of this equation, right? It's getting the expenses down. We're gonna give you every dollar, we're gonna make sure you go through your budget with a fine tooth comb to do that. But the other side of this equation, right? It's getting the expenses down. We're going to give you every dollar. We're going to make sure you go through your budget with a fine tooth comb to do that. But the other side of this is you've got to get your income up and with what you're doing currently, it didn't seem like there was a path

there. I don't know if your wife can do over time, but you've got to get more money coming in here as well. So your take home pay is 6,500, right? Per month, we're getting about,'s probably closer to $6,000 every month is our take-home every month. Okay you shouldn't have $2,300 in withholding. Yeah that feels high. I think mine's like I have about 10% coming out coming out my check but. Are you doing any investing? I don't think so. You said no. No no no no no I'm not about 10% going to taxes every month out of my check and

my wife a hundred thousand is eighty three hundred okay yeah and you're you're only getting in you're in they're taking out twenty three hundred you don't have tax bill twenty three hundred or something wrong with you got a bunch of health care coming out of that no no, no, there's not any health care. How much is your car payment on the 30,000? The car payment is a 620 on the 30,000 and the other one 17,000. What's that one? 400 bucks a month. Okay, that's a thousand and you got fifteen hundred out of six thousand and we got two cars paid and That's a thousand and you got fifteen hundred out of six thousand and we got two cars paid and two thousand for daycare. And you're probably not paying anything on your student loans.

No, they're in hardship deferral probably. So where's the other half of your income going basically is what we're asking. Fifteen hundred, twenty, thirty, thirty five hundred of his daycare and two cars and the rent and then you got to eat. I don't think you guys are living on a tight budget. I think you need to get on every dollar. Yeah, you do. So we're gonna have Christian pick up, make sure you get every dollar,

and we're gonna make sure you have financial peace, university, I think that you need a crash course in financial literacy, personal finance, how you manage your money, you and your wife go through it together. But your homework is tonight to create that every dollar budget. You can create it in five, 10 minutes,

go on YouTube and George Campbell and I will show you exactly how to do that on our YouTube channel. Yeah and if you find that your car gasoline bill is what's breaking the back of this thing tell your employer you're looking for a job. Yeah. Thank you for joining us America we're so glad you are with us. If you would like to help us out we would definitely appreciate it. You can help us a lot by clicking subscribe or follow on the particular platform you're watching or listening to. Spotify just launched a video, we're one of the first on that as

well. You can check that out. Thank you. Amazon Music is blowing up. You can check that out as well. So wherever you're listening to podcasts or watching us YouTube, whatever it is, we would appreciate you following, subscribing. Also, you can share with some of those particular platforms. At the minimum, you can cut the link out and send it to somebody.

So hey, listen to the show, check it out. We would appreciate that. You can leave a nice five-star review. You could just tell somebody, like old-fashioned style, like analog, and say, hey, I listened to a show. That's right. And that would be fun. And try that.

So, well, business owners, it's here. The Build a Business You Love book is officially out. It's launched officially yesterday. It's available to start reading today. This is not just another business book. I started this company with nothing on a card table in my living room. We're now doing 300 million dollars in revenue with 1,100 team members, 650,000 square foot campus. How did we do that? What are the five stages of business? We members, 650,000 square foot campus. How did we do that? What are the five stages of business?

We coach over 10,000 small businesses and entree leadership. How do we coach them? What do we show them to do? Well, there's five distinct stages of business and six drivers that drive them. So we can show you every bit of that. It's pretty much the baby steps for small business.

Little more complicated than that. A little different system, but it is at least a clear path towards success. You can grab your copy of Build a Business You Love anywhere books are sold but certainly RamseySolutions.com or click the link in the description. Hayden's with us in Tampa Florida. Hi Hayden, what's up? Hey guys, thank you so much for taking my call. I really appreciate it.

Sure. My wife and I are starting over back in Baby Step number two and she feels our budget is too restrictive without any room for fun money. And so my question is, what amount of our income should we budget for while in Baby Step two and how do I get her fully on board without making her feel

quote unquote controlled. Why are you starting over? Yeah, so in 2023 we took FPU through our church and we had a really great success with it. Got off all of our debt besides one vehicle and at the time our house we hadn't moved in yet but we had a house also that was in the future. And anyways, yeah. So unfortunately what happened was my wife started to kind of feel very controlled and because she was not able to say yes

to things like giving gifts for baby showers and not able to go out to eat for dinner you know, a dinner with friends and stuff. And so she found herself always kind of calling me and being like, well, can we do this thing for $50? And I was like, it's not in the budget. And so then she started to kind of, you know, get mad at me as her, you know, sounds like you did a budget and told her what to do. Yeah. What's different this time? Yeah. Well, so ultimately, so ultimately since then we've had a

baby boy who was born in 2023 and we have another baby that is coming in May, at the end of May, and so we're really excited, yes, but ultimately I am freaking out and I've told her many many times about this and I said listen like we need to we need to do something and I you know John Delaney said it great he said I feel like a gazelle that is anchored down and that's genuinely like how I feel right but what changed with your wife we know how you feel she's never been on board board. Yeah it's always been kind of my idea to do this and she's been supportive at times. No she's not. It's only to a point right she doesn't want to feel that sacrifice. Until she hears the word no

she's supportive she's not involved at all. Can you tell us more what the debt is and your income so we can see a clearer picture? Yeah, yeah, the debt's pretty bad. So credit card debt, we have 19,300. Cars were at 64,000. Can you break them down? One and two? Yeah, yep. Car one is 27,000 and car two is 37,000. Okay. Car two is hers and you bought it since you went through FPU. Yes, that is correct. Is it a minivan? Yes. No, it's a Tesla. Okay. And can you tell me what they're worth? What's the $27,000 one worth? I don't know. I think the $27,000 one is a Hyundai Santa Fe So it's probably 18 to 20. Okay, so now you have that prior to and PU

Yes, okay in the 37. What do you think? It's fairly new It's yeah, it's fairly new. It's probably you probably could get 28 for it 30. So Hayden. Here's the deal. Okay She's not involved in this at all emotionally and so you've become her parent and she doesn't like it when you tell her no she can't go to the movies no i can't do this

and and you're getting tired of being the parent so uh... ultimately you to probably need marriage counseling. You need to sit down with somebody. Not because of FPU and not because of Ramsey stuff, but because you're the only grown up. And you're trying to raise a kid now and it's freaking you out.

And it's good that you were freaked out because you need to address this issue and so she's because it and the and a part of that goes all the way back to When you all were in financial peace University She went against her will because her husband begged her to and she loves her husband and she wanted to try to do what he wanted to do she went in there and listened, but she did not buy into a different future that you saw.

And once she gets the why you're willing, wanting to do this, why you're wanting to do this, why you're freaking out, then the how will change. But until she's in agreement with you about the future vision of where we want to go and why we want to go there, you're not, you're going to struggle and you know, you didn't have the marital chops to defeat a $37,000 car purchase. That was absolutely asinine.

It's asinine. Yeah. And you knew it when you did it. But you went along with it trying to make someone happy by buying them stuff. And it doesn't work, hon. It doesn't work. So if you can't get with her and the two of you say, say number one, I'm freaked out, honey.

I'm carrying all the stress and all the load of these ridiculous purchases that I have allowed to be made in this house and I'm freaking out and I'm not doing it anymore. Number one. Number two, the two of us need to start thinking about what our future looks like in HD and what it's going to take for us to get to that future. If we cannot get aligned on that in the next 10 days, we need to sit down with a marriage counselor because I'm not going to be your daddy until you know anymore and I'm not going to participate in a situation where you're

whining to your daddy that his budget is too restrictive because you're imposing this on her and she's not got any adult ownership in the sacrifice that has to occur for you all to swim on this because you need to sell her car yesterday. It should have never been purchased and you guys need to get on beans and rice, rice and beans, and don't talk to me about baby showers when you've got dead up around your neck and you got a one year old. The only baby shower is showering this kid

in food and diapers. That's it. Your kid, not other people's kids. And don't talk to me about your Instagram life. I couldn't give a crap less about your Instagram life. But that's me being mean and Forceful because that's what I see in your own lives You guys have you've got to want a bright future more than you want a false present. That's right

Yeah, my guess is there's something behind this. I think Dave is right You go to counseling you're gonna figure out what that is because there is something stopping her from wanting to go all in on this. And usually we see Dave that kids kind of trigger something in you. It's not done that for her. So my guess is there's something deeper in here. And I do think that counseling is going to reveal that. But at the end of the day, like we're the only ones that can change. You can't make somebody change. So she's got to get out and get onto it. Yeah. But you've been talking about what way too much and not why why mm-hmm and you've got to work on that and then she's got she's gonna have to

take an adult position in this relationship where we sacrifice together for the greater good of our overall family not I want something that you've got a long life you don't fix this dude this is the Ramsey show in the lobby of Ramsey Solutions on the debt-free stage Matt and Laurie are with us hey guys how are you we're well good where do y'all live Oregon City which is just south of Portland Portland Oregon, Oregon. Portland, Oregon. Welcome to Nashville on the other side of the United States. Very cool. How much debt have y'all paid? 94,530 cents. Good for you. And how long did that take? 24 months. Two years straight up. And

what was your range of income during those two years? 123,500 to 162,500. Cool, what do y'all do for a living? I'm in real estate, I manage commercial properties. Cool. And I'm a project manager with a building envelope consulting firm. Oh, wonderful, very good, very good. I think I found out how y'all met.

Yes, indeed. Very good, good. Well, welcome guys, good to have you. So what kind of debt was the 95,000? We had some medical debts, some car loan, we had credit cards and a personal loan and a lot of student loans. Wow.

Wow, a little bit of, you were normal. Very. We were normal. How long y'all been married? Two years. Two years. Oh okay, so we come into the marriage full of normal and you looked up and said 24 months ago,

boom, we're gonna knock this out. Tell us the story why you decided to turn on a dime like that, that's pretty cool. So we, actually before we got married, we got engaged, and we really wanted to be intentional in our marriage and do everything we can to have the best marriage possible. So we went through marriage mentoring with our local church and it was an amazing experience.

It was also very eye-opening in things that we were very harmonious in in our relationship, but also things that were potential conflicts and finances were one of those things. And so we were like, yeah, we don't want that to become an issue. Like it's one of the highest reasons for divorce rates, but we don't want that.

So my work actually supports with our education credit paying for the Ramsey Solution membership. So we're like, hey, you wanna do this? And so we did. And he brought it home. He set up the budget meetings. We stayed firm on the budget. We set up the every dollar budget

and just really followed it through the process. Yeah, no objections. Was there any part of you that was like, I wanna do this, but maybe I don't want to do it this way. You know, we kind of struggled with our op con meetings. We called them op con meetings because it just was quicker. Um, op con, op con operational con fab. We turned it into, you know, how, how are we going to look this month? We, we,

we said at our schedules, what are our priorities? Do we have family meals? Do we have bigger expenses? Do we have work expenses? Do we have meetings that will keep us out late night sometimes? And just really prioritized what was important to us at the time, which was paying off our debt,

but also being able to live like no one else so we can live like no one else. And so trim the fat on our budget, cut out Starbucks restaurants, the non necessities, and really paid off our debt. Cutting out Starbucks for her was a lot. That was a big, that was. It was a quick and easy, but yeah.

The good news is not forever. No. 24 months. It's just no for now. Yeah. But it was great. It was wonderful experience to communicate and go through this experience as a married couple,

as a young married couple and do the hard things so we can do hard things later. And we proved to ourself that we can communicate, we can be prescriptive in what we want and do the hard thing. Yeah. See, this is the exact opposite of what I just hung up with. Yes.

Same thing. We had some advice. He heard that. You know, and so, because what happened here though is exactly what we prescribed to that other couple is that you were both aligned on why. Your big why, I heard it was, the number one cause of divorce is money fights.

We're not gonna do that. We're gonna, if the number one cause of divorce is money fights, we're not gonna do that. We're gonna, if the number one cause of bear attacks is going to the mailbox, we're gonna send somebody else. I mean, we're not, you know, we're not going to do this. It's a danger zone. And so that, our why is, and then you look at it as two grownups and you say, okay, for a short period of time,

in order to live like no one else later, and to not have this money stress over our marriage, I can give up Starbucks, or I can give up eating out, or I can give up whatever, but you're deciding this as two grownups together to get to a unified goal that was a bigger why than the momentary, I want it right now thing. And that girl a good adjustment.

Your old unity is very evident. It's very clear, yeah. We were very intentional on these are the large expenses this month, be it infertility treatments, be it doctor's appointments, be it he's got a car repair. We set those priorities early in the month, so we set our budget according to that, so we knew we had to prioritize, here's our debt,

here's our big payment, and here's what we can do elsewhere. And we changed our habits. We no longer ate out, we had game night. We found a new recipe online and we cooked together. We did a lot of meal prepping, that was kind of a natural thing that I did, but I brought it into our relation to cut out going out, going out and eating lunch out.

It's interesting. You had to say no a lot. You can do anything for a short period of time. And you paid off 50,000 bucks a year for two years, basically, and you did that on 123 to 160,000. We did. I mean, and that's pretty impressive. You had a good life during that time,

but still had substantial progress. What I hear you saying that you guys did a good job on is with the budget, you have foresight. So all of these things that come up that people think, oh, I didn't know this was coming, or this felt like an emergency, or this felt like something. You guys had the foresight to look ahead and go, really, what is our life?

Really, what? Well, let's be honest, and there is a reality there. And I think that that's what helped you guys had the foresight to look ahead and go, really, what is our life? Really, what? Like, well, let's be honest. And there was a reality there. And I think that that's what helped you guys plan to be not only pay off the debt, but to do the things that are just normal parts of your life during that time. So they weren't things that were thousand,

I got to dip into my thousand dollar emergency fund. And that I think was really smart on you guys' part. What was the hardest thing? Say no to gifts. Yeah, we're big givers. We're both givers, so Christmas time was tough. The first Christmas was really hard. But yeah, saying no to trips, saying no to... Did you get any like pushback from the person that was expecting to get gifts? No. We had to cut out family travels. My family's not close by, so going to see my family

meant $1,000 to pop a plane ride. And so we had to say no a couple times and say, you know what, this just isn't the budget. And our parents were very supportive. They said, we know you have those priorities. We still wanna bring you out. We'll cover your flight this season. And you learned that adults don't need gifts.

That's great. First hand, they survived. Yeah. That's great. Yeah. First hand. Yeah. They survived. Yeah. And we changed our, a lot of our habits, you know, eating out is kind of just, it's a luxury nowadays.

And on occasion, he works late, I work late. So food is just, you need food, but it didn't have to be, you know, a hundred dollars a pop restaurant. I know that's right. We changed it and we, we put it in the budget because we knew it was a necessity of just how we live our lives, but we didn't make it the only way to live our lives.

How the abundance of the heart, the mouth speaks, and these two cannot talk without saying we. They're very we. Yeah, you guys are very unified. They're very unified. It's very impressive. It was very important to us. I mean, you can feel,

it's like God gave us this contrast two a minute ago. I mean, you can feel it's like God gave us this contrast to a minute ago. I mean, it's just, it's the exact opposite. And it's what I desire for that other couple. I hope they get that. I hope they can find their way to that because it changes everything. You guys are set relationally for the rest of your lives

because you've already killed a large dragon and you did it together. We did. You're like, hold his head, I'll chop it off. You know what I mean? It's like, we're gonna get this boy. He's going down, right? And very wise, I'm very proud of you.

Very cool. I bet your parents are jumping up and down excited for both of you. We can't wait to sign you up for the app. Yeah. Yeah, they're thrilled. Yeah, well we're thrilled for you. You're impressive.

All right, what do you tell people the secret to getting out of debt is? Do it together. Absolutely. Do the budget. You can do the budget, but if you do it alone, you're not gonna get anywhere like you will when you get doing it together.

And those first couple of budget committee meetings, whatever you called them, I don't know. OpCon. OpCon, operational confabs. Confabs, but yeah. They can be a big fight. They were hard. They were not the easiest thing.

He works differently mentally than I do. So I'm the planner. I do month calendaring ahead, and here's what we have planned. He's the analytical mind who likes the data, that likes the budgeting. So while he's coding things, I'm looking at the budget and thinking, okay we have the family dinner we have X's you know

birthday yeah so yeah we had to change it. Alright Matt and Laurie Portland Oregon area 95,000 in 24 months 123 to 162 count it down let's hear a debt-free scream three two one way to go you guys heroes baby heroes I love them this is the Ramsey show Love them. This is The Ramsey Show. The Ramsey Network app is the only place to get all the episodes of The Ramsey Show every day. You can download it for free and listen for free.

It's all free. Then I mentioned it's free. Using the link in the show notes or by searching Ramsey Network in your app store. If you're on the radio, you're going to get what you've always gotten but what is effectively the third hour of the show for Talk Radio is on the Ramsey Network app for free. We do not charge for it. It is free. You can download the app for free, the Ramsey Network app. Jade, it's free. Okay. Just checking. Just making sure. Okay. Pete's in Bozeman. Hey Pete, what's up?

Mr. Ramsey, is that, is that app free? I like it. What's up in your world brother? I got a real estate question for you. Um, I don't believe in any kind of personal debts. If you can't afford it, you can't afford it except for buildings. And I got, I got about, uh, $800,000 worth of personal debt on buildings, a house and a vacation house. And then I got a commercial building that pays me about 14 grand a month,

but costs me just shy of 9,000 a month in interest. And I turned a cool million in the last two years, and the Mrs. thinks we should pay off the personal stuff, but the personal stuff is financed at two and a quarter. And the commercial loan is financed at almost nine. And so I think we should pay off the commercial, and then let the commercial tenants pay off the personal. She thinks we should pay off the commercial and then let the commercial tenants pay off the personal Okay, let me thinks we should pay off the personal. I got it. They could be breath. I got it

So the commercial did you know you didn't personally sign for it? Oh Yeah, okay, it's all personal okay All right. Yeah, so so how much is owed on the home? The house your personal residence about 800 About 800. About 800. The other property, the big one, the big one you're calling commercial, what is, what do you owe on it? Just over a million. Okay, one million. Okay. And what was the other property? Lake House. Vacation House. Okay. And how much on the vacay house? Oh, oh, the 800 was the house plus the vacation house.

It's all together. We'll break them out. 300 and 500. Okay, gotcha. And you have a million sitting in savings right now. Yep. And that was one years of income or two years? Just shy of two. Okay. All right. What does the next two years look like? Same thing? I would like to not have to work so dang hard.

Well, I'm trying to get your debt paid off, so, and you're doing pretty good. I'm proud of you. You're making a lot of money. But let's pretend that you could make another $500 a year, so you could make another million in the next two years. So then the question becomes only which one we pay off first because in the next two years the other one's going to get paid off anyway agreed in four years it's all done yep okay all right so the point is we're not really arguing about what's more important we're just arguing about two years okay I believe so. Okay.

Alright, if I'm getting, assuming you're working as hard as you used to work, so I don't know. After that, you can do whatever you want because you're sitting on a couple million dollars worth of paid for real estate and other investments and an income potential that's incredible. So if you want to crank it back a little, oh well, that's great. But I'm probably going to keep the fires burning and knock these puppies out if it's me. I don't know what you're doing but you're doing it well congratulations uh... i'm proud of you like that income and

i'll tell you what i would do and then i'll tell you why i would pay off my home and my my vacation home okay and i'm gonna do that for two reasons number one when where you lay your head is paid for it changes your swagger

it changes your the way you're doing this are you you're doing some kind of self-employed business i assume yes sir are you selling what do you what do you uh... it's in i'm in media okay so the the I'm in media. Okay, okay. So the way I run my business is affected by the fact that I don't have any debt in a positive way.

Okay? The swagger is just different. I don't have to worry about anything with my lake house or my personal residence or my office building in this case too, because I don't have any debt. But so I'm gonna pay off your house and your lake house for that reason or your vacation house first and I'm gonna do that today because where you lay your head is the most important place. The second reason I'm gonna do that is Proverbs in the Bible says, Who can find a virtuous wife for her worth is far above rubies. The heart of her husband safely trusts her, and he will have no lack of gain. Your wife is saying, pay this stuff off, and I'm going with her,

in other words, because you'll have no lack of gain if you learn to listen to a virtuous wife. And that doesn't make you henpecked, it makes you wise to make decisions with your partner in life. And so I'm going with her for those two reasons. I'm going with the pay off the house first for those two reasons. And the math doesn't matter to me because the math difference over 24 months, which is all we're discussing, is negligible. Well, if you're gonna quote scripture to me, I guess mama wins.

No, I did worse than that. I quoted scripture to you about mama winning. Always say, happy wife, happy life. That one too. You were gonna be the tiebreaker, so I appreciate it. wife, happy life. That one too. You are going to be the tiebreaker. So I appreciate it. Thank you sir. Thank you Pete.

It's a good discussion. Good for him. Yeah, good for him. He's killing it man. Yeah, good job. And he's having fun. He is. And he's fun.

He is fun. So great. He's about to have a lot more fun. He's got a million dollar net worth already. Good for him. And or more. Cause I don't know what that building's worth above the million that he owes on.

Yeah, he didn't say, he didn't say. But and he's getting ready to have an excessive of two million, three million, four million dollar net worth and he's killing it in Bozeman, Montana. Way to go Pete. I'm so proud of you. That's so fun. The true answer to the story is you really can't

screw this up if you do either one first. No, he's fine. There's no big, like you're stupid if you don't do it thing. you do either one first. No, he's fine. There's no big like you're stupid if you don't do it thing. I don't think so, but I do think that they'll have more peace if their homes where they're at most of the time is paid off first. Now when let me help you guys with something too. Let me teach you something. When you think you're doing an analysis based on interest rate, which he said this was lower interest rate, right, that we just paid off. When you actually

multiply out the difference for a short period of time and turn it into dollars, how many actual dollars are different in two years only? That's not much. It'll buy you a chicken biscuit. I mean, it's not a lot, right? So sometimes interest rates really matter a lot over a long period of time. But in a very short period of time, like I'm going to pay this thing off in six months or something like that, some of you

are looking at these things like, I'm going to pay off the highest interest rate, but in six months it doesn't matter. Especially with his income, he could care less. Yeah, he's slaying it, man. He's just slaying it. That is so cool. And that's one of the reasons that the debt snowball has continued to survive, is the thing, the idea that the interest rate doesn't matter because it's a short period of time. Because we teach to list the debts regardless of interest rate,

and we're not talking about his situation, we're talking about everybody else out there, smallest to largest, pay minimum payments on everything but the little one and attack the little one as if your life depended on it with a Vengeance right when you knock that out you get a positive feedback loop Psychologists would call it in other words you get an attaboy you get some success You go on a diet and you lose five pounds the first two weeks. You're gonna keep great

Yeah, you don't keep doing you're gonna diet and you don't lose anything for two weeks, but I'm promise you you're building muscle You know it doesn't feel right that one just doesn't that promise doesn't hold it that won't keep me out of the doughnuts I know that's right. So, you know, you got it. You got I need something. I need I need some quick wins Especially on something new to give me the hope to continue and that's why the death snowball works But truthfully I would say when people get intense, like super high intensity, which is what we teach, and they're working together, they're paying off all of their debts except their home,

typically in two years and less. That's right. And then it really does, like you said, that interest really doesn't matter. Doesn't matter. I mean, the 24% one, whatever, versus the 6% one, it just, it becomes irrelevant. And it was on on $500 it wasn't on you know it wasn't like it was not big money in those situations. That's right. One of the reasons that the

debt snowball arguments against it are humorous if you were to actually do the mathematics. That's what you're looking at. This is the Ramsey Show. This is the Ramsey Show. Live from the headquarters of Ramsey Solutions, it's the Ramsey Show where we help people build wealth, do work that they love, and create actual amazing relationships. I'm Dave Ramsey, your host. Thank you for joining us. Jade Washaugh, number one bestselling author and and Ramsey personality is my co-host today. Robert is in Washington DC. Hi Robert how are you?

Doing great Dave thanks for asking glad to have a little bit of time on this show with y'all. Well we're honored how can we help sir? So I have a family business that we've been managing for about seven years now. It's going to be closing down in the next couple months and we're going to be due to owe about $160,000 in debt. How can my wife and I attack our share of the debt while also protecting our household finances? Okay, who owns the business? So the business is a split between

my mother-in-law, father-in-law, my sister-in-law and her husband and my wife and I. It's not exactly one-third all the way around but it's pretty close. Okay, so what percentage do you own? My wife and I own 30 percent together. Okay, and what is the nature of the $160,000 in debt? What kind of debt? My wife and I own 30% together. Okay. And what is the nature of the $160,000 in debt? What kind of debt?

So we're going to owe about $21,500 in the next six months of rent due to our lease agreement with the landlord. We will, we owe $74,500 approximately through a PPP loan. Thanks COVID for making things difficult, of course. And then the last part is about 70,000 that my father-in-law, when we initially purchased the business, he fronted that through his, you know, retirement account, taking a loan on his IRA or something like that. And even though that part's not, you know, like legally actionable debt, I think it's morally and ethically the right thing to do to pay him back as well.

Right. What percentage of the business does he own? He and his wife together own 40% with my sister-in-law having the last 30%. So the 160 of debt, is that 30% of the overall debt or is that Is there more debt besides that is what I'm asking that others are on the hook for This is basically everything now I understand that my father-in-law could kind of absolve that 70,000 if he wanted that steps his I guess that's his percentage It turns out right right so if he just if he said number if he just took his percentage and against his retirement

and called it he's out right then it's just about to him as well as a possible course of action what's the it's the natural thing to do mathematically yeah why would you be on the hook for 100% of the debt if you own 30% of the business yeah he you're on he's on the hook for 40% of the debt if you own 30% of the business? Yeah, you're on he's on the hook for 40% of the debt and 40% of the debt is to him So that's just a wash. I mean it may be a little bit. It may be a little bit off There may be a few thousand dollars. It could be like five thousand dollars off, but it's pretty close Okay, then you've got the PPP and you got the rent. Have you all tried to negotiate with the landlord at all on the final rent? Actually I got notice about an hour ago that he's willing to do a little bit negotiation so we might be able to knock

that number down significantly. That does change the formula with your father-in-law then? Yeah yeah and I said the last wrench in the gear here is that my wife has that PPP loan is about almost almost 75,000 she is the sole guarantor on that. Holy crap. Yeah yeah so she did it in the name of the business but she only lose herself on the math. Wow. And you own 30% yeah and that doesn't equal 74 okay so yeah like depending on okay the total is going to change when the rent changes so 40 percent changes and it's not going to be enough to cover father-in-law says his is not going to be a wash as the rent goes down you You follow me on the math equation?

Not exactly but I'll go with it. Let's just say you cut the rent in half and you got a 150 debt that you would apply 40% to instead of a 160 debt. You follow me? Yeah, that's right. Okay. Then that's 60,000 bucks not 70,000 bucks. So your father-in-law is still owed ten thousand dollars you all still owe the rent and

you're still over the other so right is there any cash anywhere like is the lease guaranteed at all I can't recall something I had okay we got a personal personal guarantee on it by one of the other parties because I'm starting to try to divvy this up. Like your father-in-law is going to get his, you guys are going to get the PPP and somebody's going to have to put some money on the PPP for you all because you don't owe all of it. It's now half of the loan and you only own 30 percent so somebody needs to throw some cash at that for you all. Does anybody in the picture have any cash? We don't have a whole lot on hand.

I mean we've my wife and I got through through the financial peace University a few years back we could potentially throw an emergency fund at it. I know this is not an emergency. It's close. Quote unquote, right? But there's no, there's zero cash in the business. After you close. The business is, is doing not well right now. We can potentially liquidate, which is we're going to have to do anyway, but we're trying to do some kind of, you know,

fire sales on the remaining items and wholesale things to other businesses in the area. Yeah. It sounds like mathematically, it sounds like mathematically any cash you guys can drag out of that business needs to be thrown at the PPP. It makes sense. If you can get the PPP down to where it equals your share, then you guys just take it on and move it over onto your personal debt and pay it off, right?

That's your portion of it. Right now it's double your share. So if you guys could find 20,000 bucks and or the other sister-in-law comes up with that and then so you take the PPP, the father-in-law takes his and your sister and your brother, other sister and brother-in-law, whatever they are, owe the father-in-law a little bit of money and they owe the back rent. Yeah, it could be something like that. Yeah, that's good. I try to seek some kind of notarized agreement as to how we break this down? Yes.

Yes. I was going to say, do you foresee? I'm not worried about it being notarized. I'm really worried about everybody agreeing to it. Right. I was going to say, do you foresee any issue with them understanding how we've broken it down? Because it's based on what you guys said, how it's divvied up.

Do you foresee any issue with that? No, but I just, you know, I always try to be cautious with this sort of thing and try to get ahead of any problems Yeah, notarized won't matter what does matter is everybody signs it and is in agreement and that's all six parties Okay, yeah four cut three couples because I don't want the spouse Bitching later that the deal wasn't done and they didn't speak into it. Yeah. Okay. Right. So let's just let's run some numbers right quick. Okay. Let's call it 150 because you get the rent taken in half. Okay. So 30% is 60k. No, it's not. It's 45k. 40% is 60k. And so we've got 30, 30, and 40, right? Okay, so you guys take on 45 of the PPP. Your father-in-law takes 60 off of what he's owed. So now he's owed 10, and there's 10 or 11 or whatever owed to the landlord and they

owe you the PPP. So that's the way to move it around. Y'all start just assigning this but you guys need to get some cash out of this to throw out this PPP because I don't want you to get stuck with that whole thing because that represents half of the debt not 30% of the debt. And that's a big, so you just got to talk it through. It's just a math, it's a math riddle if everybody's of the right spirit. It's just a math riddle and it's you're getting rid of the personal guarantees or you're taking

on the personal guarantees where they actually belong. And this ladies and gentlemen is why I told you during COVID not to take out those freaking PPPs. By the way, I did say that. You can go back and look it up in 2020. I yelled about it and I got yelled at because I was an idiot. I love a good math riddle, so I can't stop messing with it. If you happen to listen back to the podcast, Robert, when we play it back, here's the formula. Okay? Father-in-law has 70,000 owed to him

that he borrowed on his 401k. So his 40%, if there's 150,000 in debt, is $60,000. That leaves 10,000 owed to him. Okay? Whatever the rent is, it should be around $10,000 with the landlord negotiation and whatever is owed to him, okay? Whatever the rent is, it should be around $10,000 with the landlord negotiation, and whatever is owed to father-in-law, and everything above 45,000 on the PPP is paid by the sister-in-law. Sister-in-law's on the hook for 45K also.

Robert's on the hook for 45K of the PPP. So sister-in-law owes father-in-law 10 grand and she owes the rent. And she owes whatever the difference is there, that's gonna be another, let's see, 10, she should go borrow that money and throw it on the PPP. The little bit of difference. And call it a day.

And let them- They're free and clear, their name is no longer. Yeah, they've got the PPP, they've got the remaining, they've got 45,000 of the PPP left. And that's if it's only 150. Now, if you're able to sell some stuff and do some liquidation sales and all that, every dollar you reduce this changes that formula.

It does, yes it does. That's where it gets hairy. Because you're taking the total down. And you know, what I'm gonna do is go ahead and clear the rent off as quick as possible, and then I'm gonna work on the PPP as quick as possible. And father-in-law's the last in line. Yeah, because the cash that they get from the sale, they have to also split that 30, 30, 30, 40, 40.

Well, you throw it at the debt, and it automatically reduces it. If they reduce the debt with the cash they get from the sales, then it automatically reduces by the exact same percentages. That is true, but then they have to decide what goes first. Yeah, the rent goes first, then the PPP. Father-in-law's third. There's only three items on there, and he's last in line. That is true, but then they have to decide what goes first. Yeah, the rent goes first, then the PPP. Father in law's third.

There's only three items on there. And he's last in line by far. Why? Because he's the easiest to work with. Yeah, he's in control, and he stepped up and stepped into it. Much like Robert's wife did when she signed that PPP, but still a problem. But the PPP will come take you out. You do not want-

I know it. That's why I was saying for the, I'd want that PPP done. I want the thing gone, but the rent's only gonna be like 10 grand. That's true, they'll knock that out fast. Yeah, so if you could get 20 grand in liquidated dollars, changes this formula pretty dramatically.

He didn't say what kind of business it was, so hopefully they have more than that. Yeah, I hope can get some some money coming in but it's a sad situation but the good news is it sounds like they were doing it on a fairly that the relationships are sounded he didn't he didn't bring up that they were all fighting. Yeah that's true. And I think if they were fighting he would have said so. Very interesting. Lee's with us in Spokane. Hi Lee, how are you? Hey great, thanks for taking my call. Sure, what's up? So I'm wondering if before I start my new job that won't give me a paycheck for two months, it's unpaid training, should I pay

off my debt with my last retirement? And I'd love to give you context real fast if that's okay. I wrote it out because I was so nervous. It's okay, sure. Okay. So, um... A letter to Jade. Okay. So, um, I formally worked at Baby Steps with my ex-husband and, but, and I did the gazelle intensity and then unfortunately went through divorce and post divorce obviously super difficult. I channeled all my grief into buying a home and that was back in 2018 and so I'm a home owner.

Um, the last two years I've had some physical and mental health setbacks and I'm back into that, um, $7,500. Okay. And now my assets, my assets are, so I'm 41 single, I'm about to change jobs. I have a house, I bought it for $410,000 and I owe $200,000 on it. Okay. I have a paid for 2000 fit, no, excuse me, 2015 Honda Fit. I have $12,000 in a Roth IRA and then $10,000 from when I briefly worked as a teacher for a few years.

And that's in retirement? Correct. And see, I've mostly my career has been restaurant work. So I don't have a lot of retirement That's the only room and I had from the two years of teaching but today being in that today you're asking Do I take the money that I have to pay off the? $7,500 of debt or do I wait in two months until I start getting paid regularly and then do it? Is that the main question? Correct. Do you have any other savings anywhere? Or this is the only money? Like what's what are you using to pay off this debt is what I'm asking. Well, I've been basically like the last year been

just barely making enough money to pay my bills, just kind of recovering from the last two years of like physical and mental stuff. Got you. And I will be able to rent out my house when I leave for training for my new job as a flight attendant. Yes, but you didn't answer the question of, do you have any money saved?

Oh, no, I gave you every, I think $500 is sitting in my bank account right now. And so are they providing, while you're doing flight attendant training, they're providing food and housing? Correct. Okay. And you're going to rent your house out for how much? $1,700 a month. Why can't you just throw that at $7,500? Well, my total bills are about 2,500,

so I still have to come up with. Oh, wait a minute, you gotta pay a house payment. Yeah, if I were you, in many ways, you're kind of in like a storm mode. You're transitioning, but the transition isn't complete. And if I were in your shoes, I'd wanna know, okay, I've crossed over, I made it through training, I definitely am getting a paycheck,

and then I feel like I'd hit play on paying this off. And, okay. But no, you don't cash out your retirement to do it. No. That's borrowing money at 30% interest. It's gonna be a 10% penalty plus your tax rate. So you're gonna get a minimum of a 30 to a 40% hit in taxes and penalties, and that's like saying,

hey Jade, do I borrow money at 40% interest to pay off the 7,500? No you don't. No. What kind of debt is the 7,500? Well my heater went out last summer and that was about $6,000. On what? What do you owe it to? Who do you owe it to? I put it on a credit card. Okay, so is this all credit card debt? Yeah. Okay. And so you're going to be training for three months? Or two months? No, training is six weeks, but we won't be put on the next payroll until the following month. And so I'll try to like-

And what will you be making? I'll try to make, they pay $32 an hour and they guarantee you 90 hours a month. So it's not big bucks either. That's what's making me nervous. I was gonna say- Why are you doing it? It takes time to build up to be able to have that schedule, like a full-time schedule.

That's what I've heard flight attendants say, right? Why are you doing it if it didn't pay anything? Well, to answer that question, so I'm single, I don't have kids, I know I can pick up more hours and it'll provide me the retirement, travel benefits, travel benefits for my parents and my siblings. And is there something you can do alongside it until it does start to pan out?

Because there is a seniority play there. So is there something that you can do with it? Because you can't, you can't. I'm keeping my teaching credentials. So I've been subbing. That's what I've been doing the last few months is a sense of deep teaching, which is great because it's flexible. I can pick up when I can. I can't do that in the summer, obviously, but maybe I could tutor or something.

Yeah. Yeah. I think you have to, I think you have to do two jobs until this turns into a full-time job. What was your plan to cover the house payment? 1700 doesn't cover it. My house payment is 1300. Oh, okay. So it does cover it. My house payment is 1300. Oh yeah but my bills and expenses you know. So while you're in school can you tutor? I doubt they say it the six weeks is pretty intensive training. I'm trying to figure out how you're getting through that I still feel like you're going to end up with another $10,000 credit card debt. So the stipend, the food stipend they'll give me is 800.

It'll be about $800. No, about a thousand information. I didn't have. Okay. I'm starting to see it now. And then the other thing you could consider doing is selling the house. Yeah. You're not going to be there hardly much.

Once you're going to be flying the friendly skies or whatever skies they are, you know, I don't know why we need a $400,000 house. Just get you a little apartment and go live the adventure. Sounds like that's what you're signing up for is an adventure. That makes sense. Because you're not signing up for pay. I can tell that.

So, yeah yeah I might sell the house and that solves the whole stinking thing but no I would not cash out my retirement I'm gonna weasel my way through this and not take a 40% hit our every dollar team multiple does multiple free trainings for you this month join live to learn how to break the cycle of paycheck to paycheck in just 90 days. You're gonna get a step-by-step walkthrough of the EveryDollar app.

Learning how to put together a budget to get out of debt, to get on the same page with your spouse. Our biggest budgeting questions are answered live in the Q&A, over 60,000 people have already joined. Spots are limited, Sign up now for free at everydollar.com slash webinar. Jerry is with us in Dallas. Hi Jerry, how are you? I'm doing good, how are you? Better than I deserve. What's up?

Right. A bit of a situation me and my wife are in right now. Uh, we're first time homeowner, uh, buyers trying to purchase a home. Um, after doing the math, the first three years of mortgage comes around to 45% of our monthly takeaway income after taxes. Um, the area where the house is being built is really hot right now. Everything around is being sold. Major developments going on in that area. But I guess we're just in two separate minds about do we take the plunge now or wait a year and then maybe the price goes up even further and then, you know, we're just stuck in the apartment. Why did you say it would only be that much for the first three four years? Depending on how the uh the loan is working out so we doing the two one option so first year. So

this is not only 45% it's an adjustable rate 30 year mortgage. Right. So if you're taking the average, I guess, from third year onwards, it's going to be... You don't have any idea. It's called an adjustable rate mortgage. It's going to adjust. You don't even know. How old are you? 28. What's fire dude that would cause you to be the stupid. Yeah. Yes what Dave said no No, I the mortgage is gonna be 5200 after the third year for the next 30 years. Yeah, so what do you guys make? We take home 1250 after taxes month. And do you think your income is going to double in the next year? No.

Then don't do this deal. It's really, it's asinine. You are signing up, you're playing, you're signing up for some financial suicide. The truth is, and earlier in the show we had Brian Buffini on and we were talking about this very thing, okay? Real estate, I get it. It feels very expensive. Sometimes it feels out of touch.

Sometimes it feels like it will never happen. But that's not true. However, your time horizon for when it will happen may be different from what you expected. And your neighborhood might be different from what you're expecting. That's also true. You said it's a very hot neighborhood. They're building. You may be different from what you expect. And your neighborhood might be different from what you're expecting. That's also true. You said it's a very hot neighborhood. They're building. You may not be moving into that neighborhood.

You obviously can't afford it. So what would it look like to look in a different neighborhood? Or what would it look like to just change your expectation a little bit? Because to put yourself in a situation where you're at 50 percent, for you to be trying to convince us that that's a good idea. It's not sustainable. You know everything that comes up because you don't leave enough room in your budget because you're what we call house poor. You're signing up for poverty and everything that comes up that you guys want to do

or need to do that is not, that you don't have room for in the budget is going to be new debt and so you're gonna run up a pile of credit card debt, a car debt, and you're going to run up some other debts here and there because you pinched yourself with this house payment. And let me tell you, the way the indexes are set on adjustable rate mortgages, they're set, the interest that they give you going in is a bait and switch because it's not even covering the index. Meaning, if interest rates don't go down they would have to interest rates would have to go down for

your payment to remain the same so there's a very high likelihood this payments going up substantially as soon as it's ready to adjust and so you've signed up for a rat and a wheel that's skinny that's what you signed up and let me tell you something else Jerry skinny. That's what you've signed up for. And let me tell you something else Jerry, cause we get this call all the time.

You're married, probably newly married. Yes. What happens when you decide to have baby and what happens when suddenly a wife or a spouse decides to stay home and say, you know what, I want to stay home with the baby. Now you are locked in. No, you can't.

And so the best advice I can give you is to think about that future. Oh, and you can't afford daycare either. Yeah. There's not room in the budget. That's what I'm saying. You're't. And so the best advice I can give you is to think about that future now. Oh, and you can't afford daycare either. Yeah. There's not room in the budget. That's what I'm saying. There's no foresight here and we're here to help you with that.

You gotta think about daycare. You guys are so desperate to buy a house in that particular neighborhood. You got house fever and you need to go take a cold shower. Yeah. This is a no. It's a hard pass. No.

And it's not because I don't want you to have a house. I don't want the house to have you. This transaction is going to screw up the next decade of your life minimum. If you do it. You can just go back and say the mean old nasty guy in Tennessee told me that this was going to screw up my life. And he was right. You can remember that if you go forward with this. Please son, I love you. Please don't do this to yourself and to your new wife. You're signing up for trouble. You can't afford to live in that neighborhood today. We know that because you had to put it on a 30 and you had to put it on adjustable and it's still too high a percentage of your take-home pay. There's nothing in this formula that makes sense.

Everything in here screams don't do it, including me over and over. Was I unclear? You were and we don't even know Jerry, you didn't tell us if you have no other debt. My guess is you probably already have other debt. Yeah, so we're not the cosmic killjoys here. We're trying to keep you from signing up

for what you think is a dream, and we're real sure it's a nightmare. Mm-hmm, no it is. That's all it is. We just want good things for you, brother. I want you to reconsider this and not do it. And then I want you to back up, pan back, zoom out, start looking further out, look for something a little older,

get your foot in the door on home ownership after you're debt-free, have an emergency fund, and you put down a good strong down payment and you buy a fixed rate 15 year where the payment's no more than one fourth of your take home pay. And so the translation is it's going to be a lot less expensive house than the one you're looking at. It's not going to be nearly as cool as the one you're looking at but you're brand new married in Dallas freaking Texas and for new listen for new couples that's some of the best advice that I

can think of what Dave just said and think about what your life will be once you have children because most you know I'm not saying it's for everybody but most people get they get married and they plan on having children and daycare is expensive if you have two kids you're at least spending $2,000 a month on daycare. Think about that now. Think about what, does somebody wanna stay home? Could that possibly be in the future? Because a lot of times we say,

no, I'm going right back to work and you don't know what you're gonna do. So please consider that. Because I hate those calls, Dave, when they call in. And they just, they feel like they're between a rock and a hard place because there was no foresight on really what they wanted their life to look like in the future.

Well, it all becomes about the house fever. Yeah. And it's gotta buy a house, gotta buy a house, gotta buy a house, everybody's gotta buy a house, and everything makes sense if you buy a house. It's the same stupid thing that we sign up for with education. No matter what it costs, I gotta go get a degree.

No matter what it costs, I gotta get a degree. Because you can't get ahead without a degree. And so I'm going $200,000 to get a degree in left handed puppetry. And it'll all work out. It's the same kind of, it becomes illogical because you're assigned a value to something that it doesn't have.

That's right. Home ownership is good. It's not all good when you do it wrong. It's all bad. And you know, don't do this. That's why they call them brokers. Broker and broker and broker. That's what you're gonna be. Don't do this, don't do this. That's why they call them brokers, broker and broker and broker, that's what you're gonna be. Don't do this, don't do this.

And so I'm sorry if I disappointed your realtor or your builder, but they shouldn't have told you to buy this house. A person with ethics would look at a young married couple and go, honey, you can't afford this. You don't need to do this. And instead they're just trying to get a commission. Yeah, so it will be more painful to get this house and have to let it go into years You know saying that to say no now closed on yeah, but it puts strain on your relationship

It puts strain on your career decisions going forward. It puts strain on everything You do not have margin in this deal. And then you start to resent the house because it's got you locked down. Yeah, it's not good. Well, maybe she resents him for talking her into the house. Or he resents her for saying I want, I want, I need, I need. Remember I need, I need, I want. Remember that from, uh, what about Bob? That was it. That was it, that was the movie.

Wow, look at your callback, look at that. I want, I want, I want, I need, I need, I need. I need you to get that. Good old movie. Richard Dreyfuss, Bill Murray. That's right. This is the Ramsey Show. Our scripture of the day Luke 11, 9, and 10. So I say to you, ask and it will be given to you.

Seek and you will find. Knock and the door will be opened to you. For everyone who asks receives. The one who seeks finds and the one who knocks, the door will be opened. Thomas Sowell said elections should be held on April 16th the day after we pay our income taxes. That is one of the few things that might discourage politicians from being big spenders. Man. That would change things. Yeah. Wow. Anne is with us. Anne is in New

Orleans. Hi Anne, welcome to the Ramsey show Hi, I hope I'm smarter five minutes from now. I Can't promise that So I'm a little late to this Roth conversion party and last year I I moved $100,000 from my IRA to a Roth and got a very rude awakening with my tax bill because we went from 24% to 32% and so I'm just wondering, is it better to just take the poison pill and move it all, dribble it out 50 to $100,000 a year? I mean, somebody's talking about charitable remainder trust, but that seems too complicated for me and I don't want to do something that I can't understand.

So I just need a little wisdom. Yeah. How much is it total that you're trying to convert? 2.3 million. Oh wow. Okay well the I'm sure you probably already understand that the whole tax bill did not move to 32%. We have what's called a marginal tax right just just the last portion moved to 32% right the whole thing if you if you have moved 2.3 million most of it would be at more than 32 it would bumped on from there how old are you? 71. And so you've got RMDs breathing down your neck. Correct. And I didn't know, I just learned, you know, recently about the inheritance,

uh, penalty for my adult children. It's not a, it's not a penalty. They're going to pay the taxes. And they have to withdraw it over a 10 year period of time. Yeah, well, yeah. But it's not a penalty. It's just you haven't paid the taxes so they get to. The 2.3 is taxable now and if it's left to them in an inherited IRA it will be taxable to them. But it's not an inheritance tax or a penalty. Okay so the RMDs come into play and the inheritance issue comes into

play. So we'll start with the premise of all of it being in Roth is best for both things, obviously, because you got no RMDs and you got no problem on the inheritance transfer. Then the question is what is the wisest way to schedule the movement mathematically? How much do you want to move and how often because you're going to get to RMDs no matter what we do unless we chunk this thing. And so because your RMDs are 74 now I believe. 74 now I believe. So you just got a couple years. So do you have a good tax attorney or accountant? I thought I did, but I think I might need a better one. Okay, so what I would do is get two opinions then. I would get your guys or gals opinion and then go to ramsayysolutions.com and click on ELP for tax provider

and what I want to do is I want them to sit down with you and and you could it do you have a great investment advisor? I do. Okay. You might even get a third set of calculations there because what I'm trying to calculate is against the RMD problem I want to move it as fast as I can move it tax efficiently. You're going to get some bracket creep. I just don't want to jam you all the way up in

the top bracket and do it all at once. Cause that's going to cost you an extra 10% versus doling it out over some number of years. If it, if it's going to take 15 years, I'm just going to take some tax hits. But if I can dole it out over five or seven years and not get completely and save $150,000 in taxes, which might be the case, then I'm going to create a staged mathematical formula that runs it out with the least bracket creep over the shortest number of years. Does that make any sense?

It makes a lot of sense. Okay, and I don't know how to do that in my head right now on the radio, but I think I could do it if I sat down. It might take me 30 minutes or something, but I think your investment advisor and a couple of tax people could run it, and then you could look at their different ideas of which way to do this. I think if it's going to take 15 years that the RMD and even the estate tax concerns, the RMD math and the estate tax concerns are going to overtake what tax savings you would

get so I'm not going to take 15 years. I'm going to move it in under a decade. But I don't know what the implications of that are mathematically. I got to back that out in my head. So in terms of the bracket creep. So that's what I'm trying to get it out of there to where you're going to have some RMD and that's the trade off for not getting as much bracket creep as you would get. You could do no RMD and just divide it by, you said you're 74, divide it by four years right? We can do 500 a year if you weren't concerned about

bracket creep but that's going to jam the bracket every year. Right, now you didn't say anything about that charitable remainder trust. I've taken charitable remainder trust has nothing to do with this except that you can move the money anytime you Whether it's in there or not you can move money into this and take a write-off But you lose control of it you've designated the money to a charity you get to live off of the income of the trust But you no longer own the money Okay, and you're taking a you're taking a charity right off of that and that's an estate tax move usually or someone that's wanting to ensure that their

money goes to a certain charity, a qualified charity, but the the downside is is you lose control of the money and obviously it is not going to airs either then. Yeah okay all good things. Well thank you I think I am a little bit smarter but I'll talk to some more smart people. Oh yeah I think you're gonna have to talk to ones that have got more time on their hands than I do on a radio call to be able to crunch the numbers but that's the concepts I mean there's three or four things pulling at this from different directions. So the thing I folks the thing she's alluding to that well, let's talk about it for a second is

And James when do RMD start pull that up to make sure I think it's 74 they moved it to required minimum distributions, so if you have non-roth traditional IRAs or 401ks you have they have not gotten their tax money yet and they require required minimum distributions beginning I believe it's a 74 years old. You're right. And you get taxed on the amount you that they require you to pull out and they require you to pull it out it's probably over a 15 year period of time or something like that it's got a formula. The IRS hasn't updated it, but it says if you reach

age 73 in 2024, so this is outdated, your first RMD is due by April 1st, 2025. Yeah, so 74, yeah. That's what I thought. So right now it's 74. And then the other thing is, if you, if under the Biden Secure Act, if you have an inherited IRA that's a traditional

or inherited 401k that's a traditional, meaning you named a beneficiary on your program, you leave it to your kid, 100% of that is taxable because it hasn't been taxed yet. And they're on a timeframe. And it's on a 10 year timeframe. You have to take out a 10th a year. And so you're gonna get hammered there.

So anytime you can move stuff to Roth, you do not have required minimum distributions because you've already paid the taxes and it's tax-free. And your kids don't have any taxes. So it's tax-free and there's no required withdrawal. So there's no benefit to leaving it in there because it's still continuing to grow tax-free in the inherited side but the either way the the Roth is vastly superior to traditional for those two reasons when you get into your estate planning edge of things. So tell people when they should start making those conversions. As soon as you can pay cash for the taxes that it creates and that's what she was trying to calculate.

That puts this hour of the Ramsey Show in the books. We'll be back with you before you know it. In the meantime remember there's ultimately only one way to financial peace and that's to walk daily with the Prince of Peace, Christ Jesus.