The Ramsey Show - App - This Is a Stupid Reason To Go Into Debt… (Hour 1)

Episode Date: October 6, 2023

МУЗЫКАЛЬНАЯ ЗАСТАВКА Live from the headquarters of Ramsey Solution, this is The Ramsey Show. It's where we help you win in your life. Your money, your work, and your relationships. The phone number to jump in for your question is 888-825-5225. 888-825-5225. Toll-free number. I'm Ken Coleman, joined by the incomparable George Camel. Very kind. With a K. That's K-A-M-E-L if you're keeping score at home. I love that we were on a national network recently, we shall not name them. Thank you. And a well-known host called you Kamel. Kamel.

I think it's regal. It sounds nice. It sounded great, but I'm over there. We were on opposite ends of this little riser or whatever. Yep. And I'm trying not to get the church giggles. I know. So I wanted to make sure that everybody knows your name is Kamel.

It's like the animal. People think it's going to be weird, but I appreciate that, Ken, for calling it out uh you have my favorite denim jacket on today it's like your uniform only when we're together it tickles ken when i wear denim it does and so let's get to it you ready to help some people let's do this all right we're going to courtney who's joining us in raleigh north carolina courtney how can we help hey uh thank you for taking my call. You bet. So we just completed a very significant home repair, very unexpected, for about $270,000. Oh, my gosh. Hold the phone.

Did it burn down and you rebuilt it? We were actually victims of fraud. Oh, no. built it? We were actually victims of fraud. There was significant water damage, termite damage, a lot of issues that were hidden. Also, they sold you a house that was just a disaster and you didn't know it. Is that what I'm hearing? Yes. Oh my gosh. But 270 grand, did you just gut this thing down to the studs and start over? Basically, yes. Oh, my gosh. But $270,000, did you just gut this thing down to the studs and start over? Basically, yes. Oh, bless your heart. Oh, my gosh.

And you have no recourse here. We actually do. We are pursuing that path, but we are of the mindset that we are in control of our destiny. And so, um, we want to, you know, consider any levers that we can pull to accelerate getting out of this mess. Um, we were lucky to be able to cash flow about $150,000 of it. Um, but we had to take out some, um, some loans, a 401k loan and a home equity loan to just get through it. So my question is, should we sell the house and be able to accelerate this mess by probably a year, year and a half? So what is your total consumer debt? Put the home equity loan aside, the 401k loan aside. Do you have any other consumer debt? We do. So we did stupid and went to buy two cars before all of this, before knowing anything

about the house. So we have a student loan for nine grand and then two cars for 45 grand. So a total of about 54 in consumer debt in addition to the 401k loan and the home equity. Okay. And what is remaining on the 401k loan, the home equity loan? 12,000 on the 401k loan and 97,000 on the HELOC. Is that on top of your mortgage? Yes. Oh, dear Lord. Okay. What's left on the mortgage? $350,000. And what's your household income? It's about $200,000. Okay, good. We've got a good shovel to work with here, but goodness gracious, we've got a pile of debt. So what could this house sell for now that you fixed it up? I imagine you did not ROI in the lease bid on this.

We did not. We weren't even considering selling it at that time, but we met with our realtor and he thinks we can get 600 for it. Okay. So you sell it for 600, you get rid of the 401k loan, the home equity loan, the mortgage, you'd get rid of all of your debt completely and still have a little bit left over to start with, correct? Yeah. Okay. I mean, here's the thing. Selling a home is a last ditch effort for me, but this feels like one of those situations where I go, you guys aren't gonna be able to breathe at night. And I imagine the emotional turmoil you've experienced just rebuilding this place, it's kind of giving you the ick.

It is, especially my husband. I think there's more, the mathematics make sense behind it. I think we're just dealing with the emotional side of should we sell it and just move on. I mean, does he resent the house? Because I resent this house, and I've only known about it for four minutes. He very much resents this house. Okay, then I almost always agree with George and that's going to swell his head. I disagree that this is

last ditch in this situation. I think this is option A. I would sell the house. Oh, I see what you're saying. Okay. Clean slate. Yeah. It's been a massive pain in their rear it's just nightmarish as you say to try to dig out of this they can but why not just get free and clear of it all and if you got to rent for a year uh you got an income where you can get up a nice down payment you go into it fresh and you go we learned a lot now this is one of those, sometimes you win, sometimes you learn. And they don't lose if they sell and they get out. And they're so much more educated, but they're free of all of this. I don't know, George.

The hardest part is going to be freeing yourselves of the guilt, the shame, the stupid tax, the sunk cost fallacy. All of that is going to be the hardest part. The numbers we can deal with. You guys have a great income. You can clear your debt and still walk away with probably, what, 50 grand? I would do it tonight. And then we'll restart. I'd have a sign in the yard, like within five minutes of this phone call, if it were me. This is a no-brainer. Is that where you all were leaning before you called? Yes, because the home can no longer give us what we want. We bought it before having kids and now we have a daughter and the location just isn't,

you know, there's not a lot of younger families in our area. So now there's extra reason. This is one of many reasons. Courtney, for the benefit of the audience, can you explain how this fraud happened? Did you not get an inspection? How did you get swindled here? We did have an inspection. It was a result of flippers coming in and flipping the property. They had done some work on it, but we later found out that they did not do honest work on it and really tried to spend as little as possible to just make sure it didn't, it didn't, you know, fall down before

the sale. So. But the inspector caught nothing. The inspector was like, this house is in tip-top shape. Go for it. Yes. The inspector needs to be sued at this point. That's insane. Have you gotten back in touch with the inspector and said, here's what we had to do? We have, yes. What did they have to say about it? They've pretty much thrown their hands in the air and said that they're not liable. Is it stuff that they couldn't see in the general inspection, meaning behind drywall? Yeah. So you discovered it only when you started doing some renovations?

Yeah, pulling back the siding and realizing what was underneath it. Okay, not to defend the inspector, but Stacy and I had this happen in the home we're in now. George, you've been there. That front room, we were putting shelves in, and so we saw some mold on the drywall underneath some trim. And so not everything can be seen like that. So again, not trying to defend the inspector, but sometimes that can happen. There was a leak where rainwater was getting in a small crevice in an area of brick up against the house. Anyway, the point is that can happen.

I'm so sorry, Courtney. But hey, listen, I'm glad that they can get out of it. So thanks for the call. More Ramsey Show coming up. Welcome back to the Ramsey Show where we talk to you for you about your life. Specifically your money, your work, and your relationships. If you want to win in those areas

we're here for you. It's a free phone call at 888-825-5225. I'm Ken Coleman. I'll talk with you about your work situation. Can you make the income you want and the impact that you dream about? The answer is yes. Can you do it while you're in the baby steps? Yes.

I'll walk through any of your work or income-related questions today. And then George Campbell, my friend and colleague, will walk you through any of your work or income-related questions today. And then George Campbell, my friend and colleague, will walk you through the baby steps and your money questions. And George and I have been friends a long time. How long have we been over? Over a decade now. Yeah. Probably 2010. George has his areas of expertise outside of our work, and I do as well.

And what I love about our relationship is is i'm into sports and you're not is that fair that's a very fair assessment yeah and and so that's great and and but yet we enjoy talking about sports because i enjoy learning from you you're a great teacher so i thought how about we combine my love of football and your love of budgeting and numbers and and and so i thought this is an interesting article. Let's do it. Are you ready for this? Okay.

So in my hands here, we've got a blog here. And this is a survey, and they've written about the story. The survey. And here's the headline. What's the score on consumers spending this football season? Ooh. Now, see, I knew that's a football headline that would get you excited. So here we go. Experian did a survey asking football fans. Now this would be college,

George. College football. Are you familiar with this? Well, did they not count the NFL? You didn't let me finish. Oh, sorry. You answer the questions as they come to you. Okay. Are you familiar with that? Colleges and universities have football teams? Yes. I know about the SEC. Okay, great. Big business. Yeah. Big money. And then, of course, the NFL. All right. Which is even bigger money, I imagine. Oh, yeah. They surveyed football fans, college and NFL fans, and they asked them what they spend for the pregame experience. That would be tailgating. Are you familiar with this concept? Yeah, but the whole pregame thing feels strange to me still. Well, you've got to get there ahead of time. You make a whole day of it.

You do. Well, you get there early because you got to anyway, and so people hang out in the parking lot. It's the old idea of dropping the tailgate of a truck is where this comes from. You sit on the tailgate or your big cooler and you've got your 12-packs, your 6-packs, your snacks. And it's gotten out of hand. I mean, they have tents. They've got chairs. I mean, there's furniture involved.

It's a culture now. People bringing RVs, giant TVs, watching the pregame, postgame in the parking lot. It's amazing. I could enjoy that part. Would you take me? I'm going to take you to a football game and tailgate. It'll be great content for YouTube. We can film it all.

For your YouTube channel. We'll strap on some GoPros. So here's what they found. How much are you spending pre-game during a football game and that will include everything from chips and salsa on the couch at their home to tickets on the 50-yard line. So this is

any money you spend on football. Alright? Okay. And here's what they found. That fans expect to spend an average of $743 on football. All right? Okay. And here's what they found. That fans expect to spend an average of $743 on football throughout the whole 2023 season. Wow. About one in five say they anticipate they'll overspend on football this year. 12% saying they're likely to go into, hold it George, debt. To go into debt, presumably on the credit card,

to finance their football fandom. To go to the game. That's the big thing. Or have a party at the house. Maybe they're spending money, extra grocery money they can't afford, to cook some wings, have a football party for money. Just do a potluck. Say you bring the chips and dip, I'll bring the buffalo chicken dip. All right, now hold on.

This is going to give you heartburn. 20% of fans said they'd be willing to take on $5,000 in debt to get to see their team play in a championship game. So maybe the AFC or NFC Conference Championship or the Super Bowl or a bowl game. What do you think about that? Well, it's confusing. Are they saying, hey, I want to see my team win?

Or are they saying, hey, if your team makes it to the championship, I'm willing to take on five grand in debt to go to that game. Yeah. That's insane. Because these are the same people making fun of Taylor Swift fans for spending two grand for Taylor Swift tickets. They have no right to do that after spending five grand to see their team win a championship.

Let me throw another one at you. 33% of the fans surveyed said they would eliminate their outstanding debt in exchange for their favorite NFL team not winning a championship for another 20 years. That's a very confusing survey question. It really is. Do you understand it? So they'd say, hey, I would get rid of my debt in exchange for my team not winning a championship for 20 years. Yeah. That makes no sense. They're saying they'd rather,

like the pain of paying off debt. Yeah. They're like, I would take that over my team not winning for 20 years. I feel like based on the teams you enjoy, Ken, you wouldn't have to even make that bet. Oh, wow. Yeah. who are you rooting for well you're a Georgia Bulldog guy right no I'm a Michigan Wolverine fan first and foremost oh yeah well it's more for our Tennessee fans and probably the Jets fans out there yeah but you see what they're going is it it's like you've nailed it they're they're exchanging that love of the game is driving their terrible decisions yes that's the point so here's what I wanted your take on, George, financially. The word fan comes from fanatic. You got that? And so people are making fanatical decisions that are hurting them financially. The one that stuck out to me the most was the $5,000

willing to go into debt to go on a trip and see your team play. I can see how the mental gymnastics they used to get there make sense to go on a trip and see your team play. Go into debt. You bring that home with you. I can see how the mental gymnastics they used to get there make sense to me because they go, Ken, this could be the only time they ever make it to the championship. So they start to play all these scenarios in their head and they go, this is it. I'm going to be able to tell my kids I was at that game. That's the narrative they're playing in their head.

Now, what did you think of the $743? I actually thought that was kind of low. These people aren't spending a ton because $743 over a full season? Well, for two people going to a game, it feels like that's it. You just blew that $750 if you're going to a game. You're going to be close if you talk about parking. Especially travel, parking, food. Talking about parking, gas, food, the tickets.

It could be well over $250. I have no clue. I have no scale for what a game costs these days. Well, you know, a cheap seat ticket could cost you anywhere from $45 to $50. Cheap, cheap seat, depending on where it is. To the NFL, you're paying several hundred dollars each for a ticket. Can I be honest? I've been to one game.

Which game was it? I got the tickets for free. It was a Titans-Patriots game. Okay. And, you know, I'm from Boston. Right. And I own a Brady jersey because the team bought it for me for a live event we did. But you don't even know his first name.

Tom. Oh, okay. I know that much. That's a little bit more than I expected. I know that much. I'm very proud of you. But they got spanked by the Titans. It was embarrassing.

I was pulling my jacket over the jersey. But let me tell you, I was staring at the big screen the whole time because I couldn't see from these cheap seats what was going on in the field. And I went, I would rather watch this at home than just listen to people screaming at me. You have no commentary you can listen to like you can on TV. And for that reason, I'm out on live football right now. But I would go with you. Could we do the face paint and everything? You are the only person that I would paint my face for because that would be funny. That means the world. Take that, Stacey Coleman. Yeah, yeah. I'm the only person in the world

he would do that for. Right. Well, first of all, Stacey wouldn't let me do it. She'd be embarrassed. You, on the other hand, would enjoy it because you'd make fun of me for years, which is great. Well, I think at the end of the day, I'm okay with people loving sports. I have nothing against that. Yes, but going into debt for it. $5,000 on your credit card? It's not fandom. It's financially

dumb, and I stand by that. I think you're right. And at some point, you've got to go, what is most important? So what's the, okay, so let's just talk about some discipline here. What's the emotional and mental exercise that someone who's trying to get out of debt, let's put them in baby step two. I mean, they're supposed to be ricing and beans in it, right? And they love their team. I mean, even if they have a party,

let's say that they just started the debt-free journey. They should not be throwing the party. They should be attending the friend's party who paid for the cable and they can bring a side. Okay.

That's it. It's that simple. But don't put that on yourself and don't sign up for the NFL package or whatever, you know, paying an extra 50 bucks a month to access all of this. Now you're stepping on toes. I'm just saying, if you're in debt, you know, paying an extra 50 bucks a month to access all of this. Now you're stepping on toes.

I'm just saying, if you're in debt, you need to have priorities. Go down to your local sports bar and go watch the game with some buddies and get yourself a nice water and enjoy the game. Okay. I like that. I was also going to suggest that with Dave Ramsey's, you know, decades long advice of rice and beans, beans and rice, you could make a nice bean dip and be a hero. A seven layer bean dip and be a hero. People love it. A seven-layer bean dip

goes a long way. So a lot of beans out there, and you put some beans together, bean dip, I'm sure there's got to... That's what you need to do. You need to do a YouTube video on how to make a budget-friendly bean dip to take to the big game. If America would

watch it, I would make it. I'm here to troll the sports fans and we enjoy it. Guarantee you that hits big on your YouTube channel. Here's the thing, just budget. Budget for it. Put a line item. If you want to go to the game, get the jersey, throw the party, that's fine. But don't go into debt for

fandom. I agree. And by the way, if you'd like to bring some bean dip to the Ramsey office next time George and I are together, we will sample it live on the show. I will not be eating bean dip from strangers. I trust the people. This is the Ramsey Show. Welcome back to the Ramsey Show.

I'm Ken Coleman. I'm joined by George Camel this hour. We're here for you to talk to you about your money. How about your work, your income? Are you feeling like you've got a lid on you? Well, I can help you there, and George is here to answer your money questions. 888-825-5225 is the number. That's 888-825-5225. Kara joins us now in Providence, Rhode Island. Kara, how can we help? Hey, Ken and George.

How are you today? Good. What's going on? Just a quick comment about your NFL thing, and then I get to my quick question. Oh, I love it. I just have to laugh because, first off, my husband and I were looking, because of just how crazy streaming is right now, to be able to stream football. We were looking at some of our options, and it's like up where it's over $900 a year,

you know, just depending on what service you're using, which is just absolutely insane. $75 a month. No thank you. Yes, yes. And then my other thing was, George, you are aware that hummus is a bean dip, right? That's true. Thank you, George, you are aware that hummus is a bean dip, right? That's true. Thank you, Kara, the food of my people. Well, I'll make some of Mama Camel's hummus recipe, Ken.

Yeah, we did a hummus feature one time on the show together. That's right. George and I love hummus. Love talking hummus. Yeah. By the way, James Childs, our fearless leader, does as well. So thank you for pointing that out. Love the commentary.

And so you show up at the football party with some hummus. Yeah, it's a great suggestion by you, the listener. So, okay, how can we help? Okay, so I'm on Baby Step 2, and we've got kind of a big mountain to roll down, which is fine. We're working on it. But I have this little brokerage account and this little employee stock purchase account that I have stopped contributing to because of where I'm at in the baby steps. I guess my question is, though, because it's a few thousand dollars, I could cash those two things out and just knock out about three small debts all in one shot. It would be the short-term capital gains taxes that I'm worried about. It's, again, it's not a huge amount of money, so like the taxes, it wouldn't be insane. I guess my question is because it's so small, should I just leave it and still keep filing away, or I kind of really want that momentum. I think the momentum beats

out the tax hit, which I assume is going to be a few hundred bucks at the end of the day. Yeah, it's not a huge amount of money, but like I said, it would just knock out three debts in one shot. That's amazing. So what's sitting in the ESPP in the brokerage account? There's like, I want to say like 1500 of the company that I work for in the ESPP, obviously. And then it's like, I don't know, like 2,500 in the brokerage. So yeah, that was just kind of. So four grand, we can throw at debt and you'll knock out three of them, which frees up those payments. Yeah. Yeah. That was my question. Do it. 100%. And I'll tell you this, Kara, someone who did that at the tail end of my debt-free journey, getting rid of $40,000 in student loans and credit cards. I had worked at the Apple store and I was just an 18-year-old and I said,

hey, we've got the stock thing. And I was like, okay, whatever. I didn't know what I was doing. And so it ended up to be like seven grand or something sitting in that account that helped kind of kickstart my adult journey and get me through the baby steps. And people go, George, I could have turned into $50,000 if you just left it. And I'm like, yeah, but I'm debt free today living my best life. I'm not worried about what could have been. And so that's what you have to worry about now is not looking back in five years from now going, I just kept those stocks. It could have been this much. Because guess what? You're going to be investing faster if you're out of debt sooner, right? Yeah. And investing more.

Yeah. Yeah, that makes sense. I appreciate it. I guess it's kind of like a mindset split. A hundred percent. It's more mindset than the numbers because that few hundred bucks you'll pay on that is going to be nothing compared to the feeling of debt freedom. Love that. Awesome. And Kara, one day- Hey, I'll be at that football party with my Brady jersey on. There it is. Oh, there it is. Hey, listen. Got to ask you, Kara. Do you keep Belichick or do you fire him? You're on the spot.

I mean, honestly, I'm going to keep him. Oh, there it is, folks. All right. A little bit of football. You can look him up later. I know. He's the grumpy guy. He's always looking so grumpy.

You know, because he realizes he cut his sleeves off his sweatshirt and he regrets that. I think every game he's like, ah, that was a bad move. Shouldn't have done that. Yeah, fantastic. Thanks for the call, Kara. All right, let's go to Albuquerque, New Mexico. John joins us there.

John, how can we help? Hi, guys. How are you doing this morning? We're having a blast. What's going on? Okay, so I have a question. I was wondering if it would be a good idea to do a 401k loan to pay off a lot of debt that I have in collections. Why I ask is because 18 months ago I was injured at work, and my company shut down, a 100-year-old trucking company.

And I have a new job, but I have to get my Q clearance for secret documents and stuff. I'm wondering if that's going to inhibit me from getting that job having to bet in collections. Do you have any evidence that that would be the case? Nobody's told me that. They said, oh, as long as you show that you're paying it. I have a plan, and I'm working on paying them. How much do you owe? What's in collection?

I have about $7,000 total, because when I was hurt, I was only making two-thirds of my income, which is why I kind of got behind. I have $7,000 I was sued last month for $3,400, and I'm paying off another judgment at the end of this month. So what is your income now? The new job is going to be, before I get my clearances, $90,000, and then I get an extra $20,000 after I get my clearance. But are you currently working? Yes, I'm working with them. I'm going through the process now. I submitted all my clearance. But are you currently working? Yes, I'm working with them. I'm going through the process now. I submitted all my documents. Hold on. You're saying you're already getting paid by these people? Yes. Okay. But you don't have the job yet? Yeah. I have the job. I'm going

to work. I'm training. It's going to be training. Okay. We're confused because you said the new job that you're hoping to get and you're worried that you couldn't get it with all this collection. Now you're saying you're working for them, so we're really confused. Okay, so I'm working for them, but the job is contingent with me getting my clearance. That's why everybody at the new job is saying, oh, don't worry about it. If you're here, they want to see you. You're already in the building on the payroll, man.

I wouldn't worry about it. And if they ask, then say, hey, listen, here's what I'm at. Let me update them. I'm working on paying this off. Here's what happened. Be honest. Tell them the story and let them know it. It's going to be cleared up real soon.

So no to the 401k loan. You don't need to make, George, tell him why that's going to make life even worse than getting rid of all this collected debt. Well, it's putting your future behind. And then they're still going to see a 401k loan if they check your credit report. And so it's not, you're just moving debt from one place to another. And so I'd rather you just be honest and upfront and say, hey, look, I'm working on settling these debts. They should be cleaned up the next few months. I mean, you're making about six figures. How quickly could you pay all this

off making six figures? A few months? Between all the debt we have, I'm thinking, well, the collections I should be able to pay off in six months at least. Our total debt, we're thinking 18 to 24 at max. So let's prioritize the collections debt to get that out of our life and then focus on, you know, we'll be making minimum payments on the rest of our consumer debt until we're out of that. Then we'll go hard doing the debt snowball. But just be honest and upfront. Say, hey, listen, less than six months, this is cleaned up. Here's what happened.

But again, you're already on payroll. It's not like, yeah, they like you. They've given you some evidence that they're not worried about it. And again, you know, listen, it's not an excuse, but, you know, you went through a tough situation and people understand that. By the way uh do you mind there was a was it the uh was it yellow truck is that the company you worked for yes that's amazing that's a big story and that's why i asked him a hundred plus year massive company that goes out of business yeah with all the our stuff was going on the same time as UPS was, and we were just there in the background.

Nobody talked much about it until... Yeah. It was a national story when it hit because it's such an old company. It's been around a long time in this new economy and the way things are going. And so John that we're talking to here, he got caught up in that, and that's tough stuff. And so I think the moral of the story here is for anybody that's listening or watching, George, that may have a similar situation, be honest.

You know, if people want you and they go, you're a good truck driver, you got a nice track record here, look, be honest. But don't compound the mistake trying to clean up something that doesn't need to be covered up. That's the takeaway here. Yeah, I like it. Good stuff. I'm glad he bounced back. That's amazing. Making six figures now. By the way,

anybody looking to get a really good paying job, the trucking industry needs reliable drivers. It's a massive opportunity. And you can listen to great podcasts like The Ramsey Show. Maybe even George and Rachel's wildly successful, just a route of a show. Now you're just ribbing me, Ken.

Huh? You're just ribbing us. No, it's a great show. Tell them what the name is. Smart Money Happy. There it is. Check it out while you're in the cab. This is The Ramsey Show. Welcome back to The Ramsey Show, where we help you win with your money and in your work

and in your relationships. I'm Ken Coleman. I'm joined by George Camel, this hour, 888-825-5225. Hey, if you are new to the show, welcome. And you hear some jargon, if you will, baby step numbers and gazelle intensity and beans are icing. What is this language? We've got a great button for you called Get Started if you're new to all this. And it only takes you a couple of minutes. Click on the Get Started button at ramsaysolutions.com. Quick little survey, and it just catches you up to where you are in the financial journey, the baby steps that we teach,

and gets you kind of integrated quickly. ramsaysolutions.com, the website, the mothership, and click on the Get Started button. All right, let's get back to the phones. Jennifer joins us now in St. Louis, Missouri. Jennifer, how can we help? Hey, guys. How are you doing today? We're doing great.

How are you? I'm great. I'm calling in. I finished Financial Teach University back in 2015. Excellent. I've had everything paid off since then. And recently I was hit by a drunk driver and I'm in a situation of having to purchase a car. Oh no.

Are you okay physically? I am. I am. I'm good. Okay. Financially, I don't want to pay for the new one. Right. So what happened insurance wise?

They obviously took all ownership. My car was paid out, but I drove an old beater with a heater. It was old. Had a lot of miles on it. It still ran, so I didn't get a lot for it. Okay, so what was the check they wrote you? $10,000. That's something.

It's not bad. I thought it was going to be lower than that. Yeah. So do you still have the $10,000? I do, yeah. Okay. And what's your question today? So my question today is is all these years i've been saving for a home the only piece of the process i don't have i have all this saved up and now i feel like um i need to take money out

for a vehicle and trying to realign what is more important especially looking at the economy the market i'm scared to let go of that money. How much do you spend on a car? What's your income? How much should I be putting? About $100,000. Amazing. And that's just you? Yeah, I'm a single source income.

Okay, cool. So the parameters on anything with motors in it is no more than 50% of your income. And that includes boats, toys, cars, everything in the house. And so I'm not saying go out and spend 50 grand on a car. You definitely don't need that. I wouldn't suggest it. But I also don't want you to get a $3,000 car if you don't have to,

if you're not struggling in debt trying to climb out of this hole. So do you have any debt right now? None. I haven't had debt since 2015. Awesome. And you have an emergency fund? Yes, a very healthy one. Great. What are we talking? 90. Whoa. And that doesn't include the money you save for the house. Yes. So how much did you save for the house?

Well, it's all in the same savings. Oh, okay. So I'm trying to decide. That's my six months, yeah. And then I have been saving money for the house on the side, trying to get out of that 20% or towards that 20%. What are you driving right now? A friend's old car that has a lot of miles on it and might lose a wheel after I turn the corner. Oh, boy. Jennifer, you have got to take care of you.

Especially after that accident you were in. My goodness, get yourself a car. What do you want? Can we dream for a moment? Because you've got the money. You earn it, you save it, and you hold on to it. You don't want to let it go. Yeah, but if you don't figure this out soon,

you're going to be driving around a corner, and all the wheels are going to come off like some type of cartoon. So that's not funny. I don't want you calling back in with that call. What kind of car do you want? You know, looking at a Blazer or something on the market, I go back and forth on new, used. What is the better option right now? Let's go used. Because cars are so expensive.

Let's go used. Unless you've got a net worth of a million bucks or more, I don't want you taking that hit on depreciation before you can stomach it. It's the same right now. But here's the thing. People go, well, George, the used car prices, there's just as much as new. Not true. No. No.

I'm sorry, but it's false. But it's tight. It's a tight margin there. Yeah. Well, you're also looking at almost new cars at that point. Yeah, but what have you been looking at? These Blazers. What are they going for? Something that's two or three, four years old. What is it going for?

About two or three, probably about 35, 40. Okay. Well, what about a five to seven-year-old version? I haven't looked there yet. That's where I would go. I drive a 10-year-old vehicle, and I'm doing fine financially, but I see no need to just upgrade to the latest and greatest for fun. I do that with iPhones. That's where I do it, Ken, not with cars. Okay, I like that. Well, much smaller price point. So, Jennifer, here's what I would do. I would split your savings.

I don't like having a giant pile that's your emergency fund plus car plus down payment because then it hurts. When you parse it out and you put 35 in a car fund and you put 40 in the emergency fund and you put 50 in the house down payment fund, now we have names for these things. So then you don't feel bad spending from the car fund. Okay. Makes sense. But I would take your time with it. We've got a great car buying guide at ramsaysolutions.com that you can access, and it's going to walk you through all the steps. I want you to do this the smart way. Don't be desperate. I know it's a crazy time in the car market.

Do a test drive. Get the inspection done. Go to a reputable, independent used car dealership. Do your research ahead of time. You better know more about that car than the dealer does. Yeah, but can I just say, I think you do. And Jennifer, listen, I just bought a car for my son. I got another kid coming up in April. I'm looking at used cars all the time

because I'm in that market. And I will tell you that if you do some search in your area, search between 15 and 20 grand, smaller midsize SUVs. Don't limit yourself to a Blazer. I think you're going to be pleasantly surprised what you might be able to find. I just got a Ford Explorer for my son, paid $12,000, and it was a 2010, is a 2010, in immaculate condition, 100,000 miles. Bought it from an older couple. Fabulous car for a 17-year-old boy. You know what I'm saying?

Yeah. If I pulled that car up to your house right now, you'd go bananas. It's that nice. It's in great shape inside and out. So I'm just giving you, and I'm telling you shirts between 15 and 20, just so you can see what your options are because that's a number that, George, I think I like that number based on your recommendation. It's nowhere near the 50% mark. Yeah. I think that's going to make you feel some guilt and then you're going to see that car depreciate. And because you're a numbers person, it's going to hurt even more.

And so that's why I tell you, find the happy middle ground. It doesn't need to be the worst trailblazer you've ever seen in your life. It doesn't need to be the brand new one. And don't let them talk you into that when you're on the lot, which is why I don't want you to start at the brand new car dealership. Start your search online. It's overwhelming. Yeah. Yeah, exactly. It's overwhelming. So start online and start to get a feel for, hey, here's what I can get in this range. Do I want to up it? Do I want to bring it down? And then do the test drive, get the inspection, write a personal check or cashier's check and be done with it. Don't let them swindle you into warranties and all kinds of random fees. No.

Yeah, I've never purchased it. I've always bought new used. And what I bought new used then is now $20,000 more today. So it's just crazy how much they've run out. That's what hurts even more for those that are car shopping these days. And I'll say this to Jennifer, to our entire audience, George. I'm a fan. I always look at like Facebook Marketplace, things like that, where I can talk to a real person. And I like to go look at the car, talk to them, look them in the eye, say, hey, are you willing to let me take this to my mechanic?

And if they are, now you know you're in probably good shape. And all cash is powerful. And you never know who's selling a car right now because they're swimming in debt. True. So you walk up and let's say somebody listed a car at 15 and let's say it's right at the blue book value. Maybe it's a little high or whatever. Go in and go, look, I'll give you 13 cash today. Whoa! You never know what could happen there, George. They want cash. Absolutely. And you show them the cash.

You know? And I just did a nice search on AutoTrader here, Ken, for fun, and I'm seeing plenty of 2021 Trailblazers going for $20,000 to $26,000. So perfectly in her price range. She's got the cash to do it. Beautiful cars. They look brand new. Yeah, it's an option.

There it is. You got options. This idea that, well, the brand new ones, well, the brand new ones are 40, right? And so, yeah, you could find used ones that are 35 if they got a few miles on it, but there's other options out there. Don't back yourself into a corner and make a stupid decision because you wanted it for your own ego. That's what people do a lot of the time.

That's right. And everybody wants to say they got the new car, but they're just literally mortgaging their life away to drive a nice new car. And then they're underwater on it calling our show. So don't do that. Be smart. Oh, it's crazy. My gosh. I'm going to have to get some

Pepsi at AC on this break. Cars, sports, what about buying cars for my kids has got me stressed out. But good hour, George. Want to thank James and the crew for keeping us on the air. We want to thank you, America. This is your show. This is The Ramsey Show. Hey, it's Ken.

If you like what you heard in this episode and want to know more about getting started on the Ramsey baby steps, go to ramseysolutions.com and click on the Get Started button. We'll help you figure out the best next step for you based on your specific situation. Again, that's ramseysolutions.com and click Get Started.