The Ramsey Show - App - Stop Spending Your Money To Fix Someone Else's Bad Decisions (Hour 1)

Episode Date: February 2, 2021

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Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I am Dave Ramsey, your host, Dr. John Deloney. Ramsey personality, best-selling author, is my co-host, and he talks to folks about all things mental health, whether it's relationships and boundaries, crazy relatives, crazy looking at you in the mirror. I don't know. Whatever it is, we'll help you with it here.

And, of course, we'll help you with your money stuff and your life as well. So it's always a good time with Dr. John around here. Open phones at 888-825-5225. That's 888-825-5225 that's 888-825-5225 kaylee's going to start off this hour in dallas texas hi kaylee how are you hi i'm doing good are you having a good day i am better than i deserve how can i help good well i have a two-part question it's about um how to pay out how to pay back our emergency fund. We pay $1,000 a month on our student loans,

and we had to use $900 recently of our emergency fund to pay for a car problem. So we were just wondering if it makes more sense to use most of our $1,000 this month to pay that back immediately, or if we should use a smaller portion of that for the next few months to pay it back slowly so we're not skipping a month of paying loans. You're talking about your little Baby Step 1 $1,000 account? Yeah. Okay. Yeah, you've got to stop paying on debt until you rebuild that if you used it.

Because for the same reason you wanted it there to start your Baby Steps, you want it there to continue your baby steps. Right. Thank goodness you had that there when that little $900 bill came up or it'd be new debt, right? Right. So that's, yeah, you want to stop everything, go back to baby step one, finish it, and then go back to baby step two again, get you a fresh start. So how are you guys doing? Okay.

We're doing great. We've paid off about $11,000 in the past few months very good what's your household income um about forty one thousand okay very good excellent so is that super frustrating or was it one of those that yeah of course it's frustrating but was it come on man we got such good momentum or did you and your husband smile at each other and say, hey, we've got emergency fund? Yeah, I mean, we've said a pair of thanks, but, you know, this isn't killing us. We have it, and we can just pay it off this month and keep going. What a great attitude, man. Good for you.

That's awesome. That's perfect. And that's the way you, you know, if you get these ideas and these principles that we talk about in the rhythm of your life instead of um being like white knuckled and forced um and that's the way you're doing it you're just this is a rhythm where you said a prayer thanks thanks money thank you god the money was there thank you god we got the money to put the money back and thank you god that we get to keep going and the next thank you god oh here we go you know i mean and that's that's that's kind of a rhythm to that i've've heard people, when they call in

and they got that $1,000 emergency fund, then the thing happens, and they throw up their hands as though the cosmos is against them. And we're always telling them, no, that's the point. That's why you have it, right? It's for emergencies. It's for that moment, right? Good for you, Kaylee.

Four. Well done. Julie is in Denver. Hi, Julie, how are Denver. Hi, Julie. How are you? Hi, Dave. Thank you for taking my call. Sure.

What's up? I have a question about being considered for a Habitat for Humanity house. Cool. And we are seeking counsel. We're on Baby Step 2. It sounds like a sweet deal, but I'm not sure it's a great idea. So I wanted to see what you thought about it. Okay.

Different chapters have different terms that they use for the process. And so how does your chapter work? I'm not 100% sure. We're still in the early interviewing process, but we are being considered. Mm-hmm. Okay. I'm wondering if it's a, like if we got into the house, the payment would be about $600 a month, which is great. So they're not giving you a house free and clear.

They're giving you a house that has a debt against it, correct? Yes, $160,000 mortgage. Okay. And what is the benefit of it being a Habitat house? That's... What do you mean? I'm sorry. Well, I mean, you could go buy a house for a $160,000 mortgage without Habitat, right? Yes.

So why Habitat? What are they giving you? Opportunity is what it feels like because the market in our area for a house this size would be near $300,000. Okay, so it's half off. It's half off, but I'm not sure if you actually gain the equity and ever have the chance to sell it. Yeah, some of them don't, and that's why you need to learn the terms. Okay. And some of them you get the home, and if there's terms into the payment plan and into the mortgage and into the sale and

so forth is they've had a recidivism problem. They've had people get into the homes and fail. Yes. And so, like a lot of them. So that's how we've gotten involved is to help them learn how to handle money so when they get a free house or a half-off house house or whatever they don't end up going and buying six big screens at best buy on 90 days same as cash and then end up losing their house and that kind of crap has happened too much with habitat habitat is a wonderful organization and they do really really

good work but they're just trying to uh people's behaviors have to change. Even if you gave them a free house, they'll screw it up. Right. Right. Your behaviors don't change. And so that so what they're trying to do is not be enablers. They're trying to be real helpers. And so their spirit is good. I'm an admirer of Habitat.

We've done a lot of work with them through Financial Peace University over the years. We've worked here in the Nashville community very closely with them through Financial Peace University over the years. We've worked here in the Nashville community very closely with them. But, again, you need to learn the nuances of the terms, and I don't mean terms as in definitions. I mean, what is the restrictions on the equity and the sale, and what is the payback, and can you refinance later and it not be in there? And you could get just stuck in some of these deals. And, again, they're well-meaning, but if things all work out well,

it's not as much of a blessing as it sounds like sometimes, depending on how they put the process together, because they're going to limit the sale or they want some of the equity back. If you do sell it or if you refinance you you know you got to refinance through the portion of the equity that they gave you so that they can move on to the rest of the houses and build them and it's just it's it gets real complicated so dig in there and learn what you're getting into you're very wise to ask a lot of questions and make sure that uh that the blessing is not so mixed i don't want a mixed blessing. Yeah, I didn't know.

I'm learning just now from that. The public thinks that they just gave them a free house. That's right. And they don't. And there's a lot of different terms to it. And it never occurred to me now that someone could get a free house and turn around and flip it and sell it. So there's going to be all kinds of caps and restrictions.

And it should. Yeah. Because the purpose is to give someone that doesn't have a home a home. And the benefit of home ownership, it's not to make, you know, not to be watching cable TV and go flip this house. Let's do Habitat. Woo-hoo! No, it's to have a place to come home to. So it's, you know, but they've had people try to scam the system, and they've got to put some protections in.

Absolutely, yeah. And so they're not bad people, but you need to really know what you're signing up for. I love it. And it's smart to do that. And so they're not bad people, but you need to really know what you're signing up for. And it's smart to do that. And then you can decide if it's right for your situation. Dr. John Deloney, Ramsey Personality, my co-host today. This is The Dave Ramsey Show. Over the years, I've heard countless horror stories from listeners about being harassed by debt collectors, receiving calls at work on their cell phones, and some even getting yelled at and threatened.

That is not okay. There are laws against this. And there are people, attorneys, that can help make this stop if they are in fact breaking the law. Go to CollectionBully.com to learn more. Fill out a quick questionnaire that will identify if you are a victim of this type of illegal harassment. That's CollectionBully.com. Dr. John Deloney, Ramsey Personality, is my co-host today. Open phones at 888-825-5225.

Tax season is upon us, I know. Try to contain your excitement. No one likes doing taxes, especially after a year like 2020. No one likes doing taxes. It's a hassle to begin with. And then you get to give money to the government, which is always a fun thing because they're so efficient with it. And then you get free tax software tools, which gets you knee-deep into the filing process and the sucker punch you with add-on fees, credit card pitches, and the opportunity to finance your refund at rates that would make a payday lender blush. Who?

You finance your refund for 90 days before, you know, you go ahead and get your refund instantly, and then you assign your refund, and it pays off your loan, you know, however quickly the IRS would have sent you your refund, and they jack you. Who? Man. It's like, well, it it's like you've seen these things online where you can buy a shirt and pay three dollars a month or something yes yeah it's the same thing if you actually add up the interest rates on that crap it's like 800 percent i mean

but nobody why is this three dollars i just paying a few dollars to get my money early because you're a child you're a child you cannot delay pleasure you're getting killed you're a child. You're a child. You cannot delay pleasure. You're getting killed. You're getting sucked into these people. There's a better way to do it. Ramsey Smart Tax. Our team's brand new tax filing software will help you file with confidence. With Ramsey Smart Tax, you get up front pricing and a killer deal, by the way.

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Text TAX to 33789. Zach is in Charlotte. Hey, Zach. Welcome to the Dave Ramsey Show. Hey, Dave. How are you guys doing? Better than we deserve, man. What's up in your world? I need a little bit of help.

I'm trying to figure out how to set some boundaries with my roommates who are very irresponsible with money. And I know that conventionally you'd probably tell me just to leave, but the other issue I have is my wife will not allow it. At the moment, I'm trying to deal with that with marriage counseling, but until I can get that solved, I need to figure out how to set the boundaries so that I don't have to keep cleaning up the mess. My wife will not allow you to leave your responsible roommates. Is that what you just said? Yeah, yeah. Okay. So walk me through wife plus roommates. Is that what you just said? Yeah.

Walk me through wife plus roommates. To start with, I'm already confused. The female roommate is her best friend since they were kids. We live with her and her husband. Because of that particular relationship dynamic,

she does not want to leave the same household. I'm fine with staying in the same vicinity. I love these people, but while we live in the same house, they keep making irresponsible decisions with money. I keep having to clean up a mess, and I'm getting sick and tired of cleaning up a mess. How did you end up living with them? Is this like a commune?

Do you all have sheep and chickens? What are you all doing? You this like a commune? Do y'all have sheep? And like chickens? What are y'all doing? Y'all have like a solar panel? What happened was So what had happened was Yeah, pretty much. No, this was pre-dave. Back in the end of like 2018, start of 2019, my wife and I almost separated

because of marital issues. That's a surprise. And you guys thought, I know what can help. We've got to get roommates. No, she moved in. Did you move in with them or did she move in with them? Kind of

both. What happened was after the separation, when we got back together and decided we were going to try to work things out, her friend advised me, why don't we try moving out to North Carolina with them? We were living in Colorado at the time of the separation, when we got back together and decided we were going to try to work things out, her friend advised me, why don't we try moving out to North Carolina with them? We were living in Colorado at the time of the separation. The town we lived in had a lot of toxic people. That was part of the issue. And her friend was going to try to get her into some good counselors that would help her out

because the counselors in our area are not very good and we moved out there and then due to financial stress pre-dave and then the pandemic and stuff we weren't able to get our own place or better the situation and it kind of evolved to where she just doesn't want to leave at all she wants if she had her way she wants to live with these people for the rest of their lives. Like we get a house together, stuff like that. But with their irresponsibility, that's not going to work. So, Zach, your marriage is in trouble, and you know that, right? Oh, yes, I know that.

Okay. And I don't laugh because I'm happy about it. I'm not happy about it. That's right. That's right. So do you have – there's two separate things here. One is to answer your question. Do you have legal responsibilities to clean the mess up of these roommates?

Meaning did you sign the lease and they're just – okay. Then to set up the boundaries there, stop spending your money to clean up their financial messes. Okay. I wish there was a more complex way to do that, but you need to sit down and say, from this point forward, I'm not bailing out the home for your part of fill in the blank. Bill, rent, et cetera. What is the financial arrangement for you to live there? Are you paying normally it's just normally it's just we go 50 50 on the rent and the bills and stuff issues right now one of uh the husband of the other couple he

is currently unemployed and we're waiting to get a new social security card so that he can get a new job somebody stole his wallet a few months ago and then he got fired and we've been trying to replace it but it's just taken forever because of the virus we well okay i say we because i did shell out a few bucks to help him i tell that's the money to help him get his birth certificate so that he can get it and that's what we're waiting on so we can get the so what what is your income uh like what do i do for a living? What do you make a year? Roughly $38,000.

What about your wife? Does she work? No, she doesn't work. You have children? None that are... She's got a daughter, but she's not in our custody. Okay. So why does she not work?

She's got really bad social anxiety and back problems. And I feel bad saying this. I'm not sure if it's a matter of she can't or she won't. Okay. I got you. That's fine. I'm trying to get her into counseling. Yeah. So Dave, feel free to bop me upside the head here. At this point, Zach, I'm going to let my wife know in 30 days I'm going to move out. It's not a helpful, it's not a safe place for your relationship. It's not a good financial arrangement.

You're running a household of four on a $38,000 income, and your marriage is deteriorating underneath you, and she's told you point blank, I'm not leaving. And so, in a way, she is separating from you by staying put and at some point you've got to take care of what you can take care of which is you and i would i mean dave you can feel free to say but i'd get a one bedroom apartment and say this is where i'm going to move and i hope you will join me say, this is where I'm going to move. And I hope you will join me here. And this is where my money's going to be. This is where our care is going to be. And then at some point you have to stop blaming every quote unquote mental health professional in your area. And that means they're probably telling you guys some stuff y'all didn't feel like hearing,

but you're going to have to go get some, some help on your own, whether it's from a good pastor or from a counselor in your area. And you got to start working on you, man. But at some point, the fantasy of this thing's just going to roll back out and it's all going to be good, your wife's choosing to live with her friend and her husband over you, and that's just the reality of it. And at some point, you've got to kill that fantasy and start living in the reality of you're going to have to make some plans and decisions. You need to sit down with a marriage counselor to guide you through how to phrase this in a way that is hopefully healing and hopefully would lead her to go with you, but you need

to leave. Because let me just tell you what I heard, okay? My wife would live with these people the rest of our lives i heard you say that now that's either drum over dramatization hyperbole or just weird yeah just straight up strange so something's got to get or she's done with you yeah and she's not going to make that that may be the message right that may be the message. And I don't know. You've got two guys in this country more high on marriage than Dave Ramsey and I. We both are high, high on marriage. But this is a situation that you've got to start protecting yourself.

And y'all got to get out of that situation. Sorry, Zach. Solar panel? Really? Hey, man. This is the Dave Ramsey Show. Imagine the day you submit the last payment on your debt and you finally have extra money to spend and save how you want. For some of you, that day feels like it will never come, but it doesn't have to be that way.

It's a new year, and it's time for a new way of thinking. You have to believe you can get rid of debt and take control of your money, because you can. And it won't take nearly as long as you think. With Ramsey Plus, you'll learn practical ways to get small, quick wins that add up to big results fast. We'll help you put more money back in your bank account so you can get where you want to be faster, debt-free and spending your money without worry. This year, you can make more progress on your debt and savings than you ever thought possible,

and you can start today. Get Ramsey Plus so you can get started living the life you want faster. To start your free trial of Ramsey Personality, is my co-host today. I am Dave Ramsey, your host in the lobby of Ramsey Solutions. On the debt-free stage, Daniel and Laurie are with us. Hey, guys, how are you? Better than we deserve. I love it.

Where do you guys live? Dayton, Tennessee. Oh, yeah. Very fun. Ray County, huh? That's right. All right. Well, good to have you guys.

Welcome. And how much debt have you two paid off? We paid off $257,000. Wow. How long did that take? It was a long time coming, but two years and three months. Two years and three months. And your range of income during that two years?

We make about $110,000 in our salaries, and with our Airbnb and extra jobs, we made about $30,000 on top of that each year. Okay. Very cool. What do you guys do for a living? We're both professors. I'm a business professor and... And I'm a math professor. I teach online and stay home with the kids.

Yeah. What's the name of the school there? I've forgotten. Bryan College. Bryan. Bryan. Yeah. Yeah.

Classic. Yeah. A lot of history. There is. Yeah. Very cool. Yeah. Very neat.

So $257,000. Is that your home? That is. That is our home. I'm looking at weird people. We're257,000. Is that your home? That is. I'm looking at weird people. We're weird. Weird professors. I love it. I was going to say, I know professors, and they're not pulling in $257,000.

See, almost it worked for a season, right? This is really like 15 years we've been working towards this. Oh, it's so cool. Buying and selling houses. We moved up here from Orlando, so it helped to go from that real estate market to here. Paid cash for a house. Bought a dream lot on the lake. Built a dream home on the lake.

Sold the house that we owned outright. Used that to pay down the mortgage, and then it worked a lot. And so you're living on the lake. We are living on the lake, yep. What is that, Nickajack? It's Chickamauga. Chickamauga. Yeah, okay.

All right. Yeah. Beautiful area. Oh, I'm so jealous. That's so neat, you guys. Thank you. Lookajack? It's Chickamauga. Chickamauga. Yeah, okay. All right. Yeah. Beautiful area. Oh, I'm so jealous. That's so neat, you guys. Thank you. Look at that. It's beautiful.

Woo! We've made a dream. We are. Yeah, that's fun. So what started you on this journey two years and three months ago? Well, that is when we started building the house. Okay. The dream home.

So that's what we just paid off. But we have been your fans for 20 years. We've talked to you on the air a couple times. You gave us tickets to a live event in Orlando once. Our son has done Foundations of Personal Finance. And we're just your fans, and we've lived your way basically our whole life. Well, that's fair because we are fans of you guys. Well, thank you.

Well done. Hold on, though. You're a business professor. You're way smarter than all of this, right? You know all the theories and all the... Yeah, you're overestimating the intelligence of business professors. Okay, well played. You said it, not me.

All right. I know a math professor could get it because you can do math, right? That's easy. Yeah, I was more of the nerd. I liked the spreadsheets, and I would put the money. You know, we had this thermometer thing. I would fill it in every month, and it was just so exciting to see. How much of this do you guys share in your classrooms of your life?

I get to share it fairly often. I actually teach a personal finance class, and I get to share some of my milestones. It's nice to be able to share that in the classroom. Any math classes? I haven't really shared it in my math classes. That's okay. You don be able to share that in the classroom. Any math classes? I haven't really shared it in my math classes. That's okay. You don't have to. I'm just curious.

Just curious. That's interesting. Very well done, you guys. How does it feel to have no payments in the world? It's amazing. Yeah. It's so great. It's like Atlas took the globe off.

I was just walking around now. It feels wonderful. Yeah. It leaves us free to do things, fun things, but also, um, so we have an Airbnb. It leaves us free to bless other people with that without thinking that we need the income from it. So, um, a couple of families, even we did this at the very last day of 2020. So even a couple of families in 2021 have needed a place to stay and we were able to say, we have a place. Yeah.

We didn't need the money. It's very freeing. Wow, that's so neat. Yeah. You guys are amazing. So proud of you. Thanks. Well, thank you.

Well done. Well done. How old are you two? I'm 44, and she's like 20 years younger than me. Yeah, yeah. She's 41. Just don't bother. And you mentioned you got little ones at home.

Who you got at home? Yeah, not so little anymore. Our son, Zane, is 16, and our daughter, Sophia, is 13. Oh, man. Look at you guys. There they are. So well done. So what do you tell people the key to getting out of debt is?

Regulating your lifestyle. Just dialing it down, making choices, being purposeful. Yeah, and I was going to say the same. Spending your money on purpose, deciding what's important to you. We shop at Goodwill and our cars are super old and we have old phones and we eat gum by the half stick to make them last. These things aren't important to us. Yeah, that's silly. But we'll also drop $100 on pizzas for the church youth group because that's important to us. So we decide what we want to spend our money on and do that.

Yeah, yeah. So you're not just completely cheapskate. No. You're cheapskate with a purpose. Yeah. Yeah, that's right. I like it. Live like no one else so later we can live and give.

That's right. Like no one else. Two or three pieces of generosity already in this story. Yeah. It's obvious you're living with an open hand. I'm so proud of you. Well, God has blessed us, and now we get to use his blessings even more for him and for others. That is so powerful.

So well done. Well done, well done, well done. I'm a nerd, too. A higher ed nerd. That's right. So February 1 rolls over. You got out your budget to pay your bills, and y'all had to exhale for a second because there was no mortgage to send. Right. What is that? You said Atlas took the globe off. Drill that down for me. What did

that feel like? Well, and for the first time, we're like, you know, we've never taken our family snow skiing as a family. We've hung out at a friend's house and done a little snow skiing. But we're like, hey, we could drop $1,000 and go snow skiing. We've never even thought about something like that before. Because that was less than our mortgage payment. Right, yeah. We'd really like to bring it.

Every month. Right, just from here on out. Yes. We're starting to think about just doing things differently now. Getting a better car, yeah. Yeah, maybe. Cars are so expensive. Yeah, we're still like, that's not really important to us, so we'll run them into the ground.

There's only 200,000 miles on my Toyota. It's good for another 200,000. That thing's just getting started. I love it, man. How exciting. You guys are so fun. I'm so proud of you. Well, we've got a copy of Chris Hogan's book for you, Everyday Millionaires.

Awesome. Thank you. And there's no question that that's the direction you're going. What's this house worth? Low fours, mid four maybe. Yeah. Yeah. Maybe five.

Look at you. Oh, you're so, this is so great. Well done. All right, Daniel and Laurie, we are big fans of you guys. Chattanooga, Tennessee area. Actually, Ray County. We need to be specific here. Yeah. Dayton, Tennessee. $257,000

paid off in two years and three months, making $110,000 up to $140,000 with all the side hustles. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Yeah! Yeah! That's so cool.

I love it! Never gets old. I love it. Now, do you know the history on that whole thing? No. So, Bryan College, if I remember correctly, I maybe get corrected on Twitter because I always do, but if I remember this, William Jennings Bryan, who was the famous orator and barrister, attorney, in the Scopes Monkey Trial. Ah, okay.

And that was all held in Dayton, Tennessee, Ray County. Thus, Bryan College ends up being there. I'm pretty sure that's the origin of Bryan College. Is that right? I'm getting thumbs up from them. Yeah. Look at that. Look at me with my Tennessee history. I love it. Yeah. the origin of the Bryan College. Is that right? I'm getting thumbs up from them. Yeah. Look at that. Look at me with my Tennessee history.

I love it. Yeah. It's very, very interesting. Ray County is a beautiful area, too. Well, yeah. It's really. I mean, it's picturesque. And so their lake house is.

I was going to say, so if you're listening to this in California, New York. You should be salivating. $400,000 lake house. Think $10 million, right? That area is so beautiful. Yeah, yeah. It's so wonderful. Well, and like you said,

they moved from Orlando and they get the quality, real estate prices are less. Yeah. That's what it is. Yeah. It's a great deal. Great deal.

And a fabulous area to live and raise a family. I mean, it's just, that's good, that's God's country right there, man. And I'm thinking of that moment that, you know, you're excited,

you paid the last payment and everybody's excited, you know, you're high-fiving each other, hugging all that. The kids are thinking of that moment that you're excited, you pay the last payment, and everybody's excited. You're high-fiving each other, hugging all that. The kids are in. They have that little Pomeranian dog running around yapping. It's all good. But it's not real until you sit down that next month to pay your bills. And then you go, oh, that much money is in the account.

Yeah. It's not going to the bank. What do you want to do? And it's like, let's go to the- My most powerful wealth-building tool, it turns out, is my income. And then you think, oh, it's going to come next month. And then the month after that, that's so great. Yeah, that's so cool.

Man. What neat people. That's awesome. Such a powerful story. Very well done, you guys. Very well done. This is The Dave Ramsey Show. Dr. John Deloney, Ramsey Personality, is my co-host today. Open phones at 888-825-5225.

Cam is with us. Cam's in Jackson, Mississippi. Hi, Cam. How are you? Hey, pretty good. And kind of out in the rural area south of jackson mississippi but that's okay and i do appreciate the opportunity to be in on the show and pose in a situation and with a with a possible blessing that we're going the right way okay how can i help yeah hey what my wife and i she's the she's the big money person. And what I mean by that, she handles everything.

I'm not much on that. But anyway, we've had her home place for years and have always wanted to have something over there. About two years ago, we bought a little 700-square-foot 1948 house from the county, moved it over there, did a lot of work, went to get it completely remodeled and built back up and everything. And, of course, around this rural area, all the best builders, they are, but they want to be paid every week. So construction loan was out of the way. Our house was paid off.

We used a heat lock to do it. Got approved for a certain amount because we used other monies. We did not and have not used the whole HELOC and won't. But I always wanted this little place to stand on its own debt. And so it's sitting there basically free and clear. The HELOC is the only debt we got. How much is the HELOC? We got approved for $150,000.

Now, how much do you owe against it? You owe $90,000? Yeah, we just got through with everything. You spent $90,000 on a 700-square-foot house? Well, we have built the thing for old age. Did you add 10,000 square feet to it no how do you spend 90 000 on 700 feet well when you when you're starting from square one now we now we had to add yeah because it was 700 we had no utility room we had none of none of the amenities to it so we had

to build on to it so So what is this total crop? What's this little house and the land worth nowadays? It's probably looking to be about $180,000 with the acreage it's got. What's the acreage worth? The acreage by itself? Yeah. Probably $60,000. Okay.

All right. Yeah. Probably 60. Okay. All right. So you have a $180,000 property that is paid for, and you owe $90,000 extra on your home. And what is your first mortgage balance? Our first mortgage, we don't have a mortgage on have a mortgage okay so nothing had a mortgage except the only mortgage you have is this ninety thousand dollar HELOC yes yeah okay and so it's sitting at about seven it's sitting at 7.5 percent yeah everything we're trying to do with

this little house and all the the bank different banks i've talked to and credit unions and stuff, the best way we're going to be able to do is a cash out on it at about 3.75. Our thought is to do that, put it all toward the HELOC, whatever little remaining balance is there. We'll pay that, but then make sure we've got this little house holding its own debt at 3.75. Why does it need to hold its own debt? It's your debt. Why does it have to hold its own debt? It's your debt. Why does it have to be on that house?

Why can't it be on your house? Well, I don't want it. I really don't want it on my primary house. Why does it matter? Because the interest rate's higher. It's not higher on your personal home. On the HELOC. We're going to get rid of the HELOC and get you a first mortgage on your personal residence.

What did you say your household income is? Our household income is about $120,000. Okay. So what I'm going to do is I'm going to put $90,000 on five years, fixed rate, no closing costs, on your home at the credit union at $2.9. No closing costs, fixed rate, five years at $2.9 or or less credit union won't do that go to a different credit union go to your local bank somebody will do that deal because you got tons of equity in both properties leave the little house standing free and clear it doesn't matter which mortgage the house is on because you're going to pay it off in very short order anyway if you're smart

matter of fact you ought to be debt free in in two years. Yeah. You could just do that. You could just pay it off in two years. Yeah, but I guess I'm fixated on this interest rate. Well, don't be. You know, get to something lower. You need to be fixated on $90,000 going away. Gotcha. Yeah, and that's true, and we are.

$45,000 a year for two years. $90,000. Done. But doing a first mortgage versus what we're trying to do on this little if you want to get a lower interest rate during that two years on a five-year note like i just said do it on your personal residence because you're going to get a lower and a lower rate than you're going to get on a non-owner occupied because that's why it's 375 because it's not occupied yeah right it's a secondary property and you can get your local credit union to do that.

But listen, here, run the numbers on this, okay? The difference in 7 and 3, let's say 2.9, is 4% on 90,000. Oh, wait, we don't have 90,000. We have 45 after a year. Oh, wait. So you're really only paying just a handful of dollars to keep the HELOC in place if you get your button gear and get this paid off in two years. And so the actual nominal dollars that the interest rate is creating, the real dollar amount, is not enough to buy a biscuit, hardly. And it sounds like the need to get this new property overrode this.

Good sense. I am debt-free, and now that we went and did it, it's not making anybody feel any better. And now we realize we owe somebody $90,000. And we had everything free and clear before we did that. Yeah, I'm just trying to get this in my head. So what we're discussing here is you refinancing this, you might save $1,800 if you pay it off in two years. It's an $1,800 problem we're discussing. And that's not worth the anxiety you're feeling over it, man.

Yeah. So if you wanted to refinance it on a five-year fixed rate, 3% or under, no closing costs. No closing costs. Must be fixed rate. No balloon. Fully amortizing on five years. No prepayment penalty with your credit union.

They'll do that deal. I mean, you have to lean on them, but they'll do that deal. That's a good deal for them. And they portfolio that loan. They hold it in their portfolio. That loan will work, and that will save you $1,800 over two years, approximately, maybe closer to $2,000. And that's worth a trip to the bank, right?

It's probably worth doing, but it's not your problem. Right. I think you used the right word. Fixated on the interest rate. You're fixated on the wrong thing. Be fixated on kicking 90 grand's butt and getting it out of your life. And next time you start a project like this, begin with the end in mind. Because you have way overdone the little house well way overdone

more so dave you mortgage your home you mortgage the place where your family lives for a 700 square foot over overdone yeah did you spend 90 grand i mean run that out that's a thousand dollars a square foot yeah we just spent on this thing. There's golden baseboards. Oh, my God. It's, you know. Yeah, you can do a lot in southern Mississippi for $1,000 a foot. I tell you what, man. You can buy most of southern Mississippi.

Just, yeah. $1,000. They go a long way. So, yeah. Cam, that's, anyway, begin with the end in mind on projects. Set better budgets on them. They give you more reasonable returns. But whatever mess you've made here, it certainly can be cleaned up.

And the fastest way to fix this is to pay it off the fastest way possible. Open phones at 888-825-5225. You guys jump in. We'll talk about your life and your money. So let me back up. What would I have done if i woke up in issues i got mama's old home place over here i want to put a place on it i make 120 000 a year our current residence has no mortgage what do we do you save up and you pay cash that's right for whatever you're going to do number one and you pay cash. That's right. For whatever you're going to do.

Number one. And you could have done the exact same deal in two years. Yep. As paying this off in two years. And then you'd have paid cash as you went. Now, here's what will happen when you pay cash instead of a loan. You don't spend $90,000 on a 700-square-foot re-own. It's the weirdest thing. When you're spending your own money instead of borrowed money, you're more careful with it.

Because suddenly you feel like, we've got $ got $150 to spend on this project, right? Yeah. Instead of, hey, we need to get this. We want to have a vision for this, and we're going to see that vision all the way through. When you write the check out of the HELOC, you don't feel it. It's not real money. It's not real money. When you write your check out of your savings that you pounded to put in there for two years,

you're like, I don't think we need the Golden Base Porch. That's right. Let's just go with wood. It changes the whole thing. Oh, man. This is the Dave Ramsey Show. Did you know over 16 million people listen to The Dave Ramsey Show every week? And a lot of those people listen on one of our 600 plus radio stations across the country.

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