The Ramsey Show - App - This Is the Right Way To Buy a Rental Property (Hour 1)

Episode Date: January 9, 2024

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. George Campbell, Ramsey personality, soon to be a number one bestselling author of the book Breaking Free from Broke is my co-host today. Open phones at 888-825-5225. Dave starts this hour in Madison, Wisconsin.

Hi, Dave. Welcome to the Ramsey Show. Good afternoon. Hey, what's up? So, my question is, my wife and I are on Baby Step 7, and we want to be able to help out our kids. We have grown adult kids. One of them just got married, and the other one is a grad student in college. And we want to be able to help them in such a way that, you know, whether it's paying, you know, helping pay for a down payment on a house or something like that, we want to help them and have it be a blessing, but not make them feel

entitled or not, you know, kind of make them feel like they're just waiting on us to provide. Are they waiting on you now? Oh, no, no. So there's not already a sense of entitlement. You're just worried that handing them $'s not already a sense of entitlement. You're just worried that handing them $30,000 might create more entitlement? Right. I mean, you know, we, like, throughout the course of them growing up, you know, we paid for their state college, you know, we basically provided them, you know, when they graduated from undergrad, you know, we got them a nice, reliable used car and kind of set them on the path and said, all right, you're, you know, you're never going to borrow money to buy stuff like that. You know, you're the next car you buy, you're going to save up and pay cash for it. You know, you're, you're not going to have any student loans.

Are they doing, are they doing all of those things? Yeah. Here's the thing. I don't think the gift causes the entitlement. I mean, you could give one person a dollar and they would be entitled and you could give another person a hundred million

dollars and they wouldn't feel entitled. So entitlement is an arrogance. Entitled is I am due the – I'm on third base. I was born on third base walking around acting like I hit a triple, you know, and you didn't do squat. So entitlement is I am due something from someone. It's an arrogance.

And it's my right to get this. I'm entitled to health care. I'm entitled to something. And it's basically saying you improperly believe that you have rights over someone else's stuff. Right? Does that make sense? so entitlement is an attitude it's not a it's not caused by an amount and so it sounds like you got really good kids that you're describing yeah yeah i mean they they worked really hard for for everything they have i mean i'm a teacher so uh you know i feel like they you know they we live in a pretty nice suburb and you know the reason that they had their schooling paid for

is because we didn't go out and buy all the things that maybe their friends had and you know we but they didn't they didn't walk around acting like that you had to do that or you were a bad human it was just what you did and so you know like know, I have a friend that bought his kids. When they got married, he bought them a paid-for house and said, you know, the only thing I ask from you is that you promise to never borrow money the rest of your life. And those kids have gone on to become millionaires fairly quickly, obviously. Got a head start with a nice house you

know i mean and they got no payments so they're piling it up but those kids were not entitled at all they they were just grateful and um i know the kids well and and they were um you know they've gone on to become normal grown adults and they just got a real nice head start because dad because their dad and mom had done well like you guys so i i think it's about the attitude uh the thing you don't want to do i guess one thing you could say is just you know don't develop an expectation with this gift of this down payment for this house that i'm always going to be here handing out money this is a one time thing and you could just say that one thing to make sure there's clarity about it right but but the entitlement has to do with their lack of character not about

you giving them an education or giving them a car or giving them money for a down payment does that make sense yeah yeah i mean and i guess the other thing i question i have with that is you know i i want to i you know this is a gift i mean i'm not the other question I have with that is, you know, this is a gift. I mean, I know I hear you constantly talk about how, you know, when your kids are grown, you can't use your dad voice anymore. You know, they're basically we're walking together as friends. And maybe, you know, I can be a mentor, but, you know, I can suggest some things, but ultimately it's their choice. And so, you know i can suggest some things but ultimately it's their choice and so you know that's the thing you know my gift would be contingent upon them you know doing these things i mean i don't have a promise that they continue to go that direction and i do have the

right to attach that with a gift i'll give you an example the ramsey family foundation we give to a lot of ministries we do not give to ministries that borrow money and so the gift is contingent upon you know the the fact that that ministry is not going to go into debt and and use some of the money i gave them to pay stinking bank interest that'd be stupid dave ramsey be giving people money for that right so i mean that but that's a gift that has control on it. And, you know, if there's going to be a gift in another year, the follow-up gift will not happen if they have borrowed money during that year. We stop them.

You know, so it's the same thing. So it's okay to attach a contingency to a gift. Yeah, and I think the worry for our friend Dave here is that he's worried his generosity of trying to offer them this blessing will turn into laziness, but he hasn't raised lazy kids, so this will not cause that to happen. The gift in and of itself doesn't cause that to happen. I mean, it can be part of the equation that caused it. I mean, if you've got a trust fund baby that's waiting on, okay, I'm going to, you know, at age 30, you're going to get $2 million.

And so they decide, well, I'm not going to work much. I'm just going to sit around and wait till I hit 30. Well, but the problem was, it was not just the $2 million at age 30. The problem was the person you raised to be that freaking lazy, you know, that mediocre mindset. to be that freaking lazy you know that mediocre mindset and so the fact that you plugged that into them before you made this announcement about this trust gift and so that's the problem with a trust fund baby you know right there the classic stereotype because that's a sense of entitlement well you've said that an eagle that doesn't uh is it a turkey an eagle that doesn't leave the nest

is called a turkey. Right. I love that. And that's, I think, the worry for every parent out there. But he's saying, hey, my kids are getting an education. They have jobs. They're getting married. They're not stuck in mom's basement. And he's going, here's $30,000.

That's a very different situation. You should be, in order for a parent in Dave's situation to come alongside and start dumping money on the situation, you should be, they should already be on fire, and you're just adding some fluid. You're adding a little gas to the fire. Not like wet wood is sitting there, and we're going to throw some gas on it and hope it lights up. That's a little different. That's the difference, right? I mean, so all you're doing is trying to accentuate the good things that are already happening.

Further those good things that are already happening. Further those good things that are already happening. But you're not going to, with a gift like wet wood. So the kid needs to already be on fire. That's the deal. This is the Ramsey Show. George Campbell, Ramsey Personalities, my co-host today. Thank you for being with us America we appreciate you we appreciate you sharing the show click the share button following and subscribing and leaving five-star reviews and all those good things thank you when you click subscribe or follow or you click the share button or you take a link and you share it or you tell somebody where you're listening on talk radio it changes our life around here it's our rankings our ratings on every platform have gone up dramatically in the past 12 months and it's largely we're blaming

it on you because you shared it thank you george is a big deal isn't it huge and i mean we hit number one on all podcasts recently which which was just mind-blowing. Number one on Apple, big time. We were doing the same show, which tells me it's largely due to all of the folks out there who are helping us spread the word. Yeah, we didn't suddenly get smarter. It didn't change. I wish I could say that.

We just had one amazing show, did it, Dave? We had a breakthrough. No, we didn't. Just still here doing what we do. Linda's in Phoenix. Hey, Linda, how are you? Hi, good. Good. No, we didn't. Just still here doing what we do. Linda's in Phoenix. Hey, Linda, how are you? Hi, good. Good.

How can we help? So my husband and I, we currently own a home. We've been here for 12 years. We have a really awesome interest rate on it, low mortgage. And we are thinking about buying another house, and we want to keep our current home as an investment property, but I'm just a little bit worried that it's going to strap us financially too much and just kind of wanted to get your thoughts.

I wouldn't. You wouldn't buy it? No. I mean, I'd sell the house and buy another house, but I wouldn't keep your other house. I know that because you have a mortgage on it. Okay. And your first goal to becoming wealthy,

one of the top two things you need to do, there's two big things to get to the first million to five million in net worth, is get your residence paid for, be 100% debt free, and build up your retirement in mutual funds. Those are the two primary things that cause people to get their first $1 to $5 million. It is not leveraged, borrowed rental property. That is not what causes the typical first $1 to $5 million. All the research we've done studying 10,000

millionaires so uh everybody talks about how good rental property is rental property is wonderful if it's paid for and your home is paid for but that's not the situation you're in okay so you say this house needs to be paid off before if we wanted to have two and you would need to pay cash for the next house okay yeah we couldn't do that i know i can tell let's pretend you were sitting in a paid for home and you wanted to buy a rental property i would tell you to do that with cash it's what i by the way the rental property with cash everything with cash never buy real estate with that because here's what happens you you don't make as much on them because you're eating up your cash flow with payments and you all of a sudden the way you're dealing with the tenant changes because you need the rent money to pay the payment you know how much I need rent? I've got a bunch of real estate.

You know how much I have to collect the rent on any of it? None of it, because I don't have any debt. And so I don't have to put a bad tenant in there hoping they'll pay because I've got to make the bank note. Okay, that makes sense. Yeah. There's no desperation when you do it that way. And your worry that you mentioned, that's wisdom. That's your body when you do it that way and you're you're worried

that you mentioned that's wisdom that's your body telling you this is not a good idea and so doing it this way it's going to take longer but you're going to do a lot of peace and a lot of patience yeah so if i were going to move in your situation i would just sell that house move the equity to the next property get that personal residence paid, and then start saving and pay cash for your first rental. That, by the way, is exactly what I did the second time I built wealth. The first time I was a millionaire, I did it with borrowed money on real estate, and I went bankrupt and lost everything because I was leveraged up to my eyeballs and I was stupid. So I wasn't stupid.

What I was doing was stupid. And if you're out there doing it, you're not stupid, but what you're doing is really stupid. So there we go. Well, Dave, this is another part I love. She said, we've been here 12 years. I love the interest rate. I don't love the house.

I just love the interest rate. People are hanging on to this. George, do you love the interest rate that you have? No, because I don't got one. The interest rate you have is zero. It's a wonderful interest rate. I love your interest rate. Thank you, Dave. I love my interest rate. are hanging on to you love the interest rate that you have no because i don't know what you have is zero it's a wonderful interest rate thank you i love my interest rate it's zero i don't have an interest rate but that's the toxic money culture dave they're saying you should get obsessed with a low interest rate a low payment that's the key now the key is be you don't know what you're going to borrow to buy your home date the rate marry the house the interest rate should be looked at

as a temporary thing not something we're going to keep around like a family heirloom so pass it on to my grandkids we're gonna make sure everybody gets a little no that's not that's right though that's how people talk about it and that's not making fun of her that's just what but that's how people think in america today so linda what we're always big on around here is getting you out of debt keeping you out of debt because it is the shortest most sustainable way to build wealth the shortest path to proven wealth building because you don't have any payments you have money and then you get to buy more stuff and help more people and be more generous. Chris is in New York City. Hey, Chris, welcome to the Ramsey Show. Hi, Dave.

Hi, George. Thanks for taking my call. Sure. What's up? Well, I am hoping to get some advice from you in terms of streamlining and simplifying our investments. We rent right now. We also, our business is mortgaging a property, and we have about $350,000 left in the mortgage. But we also own outright a rental property that's probably worth about $200,000.

And I have, we have, my wife and I have about $55,000 in a whole life policy and $65,000 in stocks. And I was thinking maybe we should sell the rental and then cash out the life insurance policy and the stocks to either pay off the mortgage on the business building or to buy a place to live outright. So I was hoping you could help me shed some light. Oh, either one of those would be a wonderful idea. I mean, either one's fine with me. If you buy a home, then what we're going to do is lean over next and start using cash flow to start paying off the business mortgage.

If you pay off the mortgage, we're going to use the cash flow to start saving up to buy a house, either way. So, I mean, at the end of the story both properties are debt free and uh that that end is not that far down the road i mean at the end of three to five years from today that's where you ought to be what's your household income uh we make uh about 120 a year okay all right right and uh what what has made it so difficult is our rent. It's just really, our landlord has been wonderful, and the rent has been so cheap.

Yeah, that's nice. I started listening to you about a month ago, you know, and I feel like it's time to make things simpler. Yeah, and I like your idea of simplicity, but also, you know, you may have cheap rent, but that property is going up in value in his name. You're right. You're right about that.

Yeah. You want to be an owner, not a loaner, man. So you'll get there. I would do this move anyways. I would cash out this whole life policy. I'm selling the stocks, and I think simplifying your life without the volatility of the stocks, without the crappiness of that whole life policy, your life's going to be better. Yeah, and get rid of the rental and buy you a home.

I love that. You can get you another rental later on down the road. Yeah, I mean, you make good money and you get the business paid off, and you're sitting there really making some serious money. No house payment, no business payment, boom, boom. We've got what we call margin at that point. Increased cash flow. Cash flow.

Yeah, money's flying everywhere. You start stacking cash at that point, and you can get your, I mean, you get yourself in a really, really pretty position. The thing snowballs in the right direction, you know, because the more of the stuff you own that you don't have payments and you've got a good income, you know, it starts feeding on itself. And all of a sudden, you look over there and it's, where's all this money come from? Oh, I'm not giving it all to the bank. I'm not supporting those towers in the skyline that has furniture nicer than I have. It is amazing when you look at the rental property numbers people share and they go, I'm going to go, how much are you making a year off of this? 1,200 bucks, 100 bucks a month. I'm

like, you're doing all of this for $1,200? Which also means, by the way, they're probably losing money. Oh, yeah. At the end of the day. I mean, that's- That's not our friend on the call here, but that's many people out there. They're doing too much at once, fiddling around, trying to skip ahead. You have $100 a month cash flow. You're not making money. Because, I mean, one heating and air filter and you're done. You know, oh my gosh. You're in the red. Just one little thing. One little sink issue. You're done. Yeah, there's no room in that. That's no fun. This is The Ramsey Show.

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So listen, y'all, there's no better way to take care of health care costs. CHM programs start as low as $98 a month. So learn more today and join at chministries.org slash budget. That's chministries.org slash budget. George Campbell Ramsey Personality co-host of Smart Money Happy Hour with Rachel Cruz. He's my co-host today. Open phones at 888-825-5225. Michael is with us. Michael's in Louisville, Kentucky. Hey, Michael, how are you? Great, how are you?

Better than I deserve. What's up? My girlfriend and I are being uh getting married this year and um we are combining households um we both have she has a grown child i have two kids that are getting ready to go into college and uh just trying to see what's the best way to kind of combine uh you know with a blended family and assets you know previous assets and things like that um what's the best way of going about combining that fairly where, you know, my kids are taken care of the way I've been planning for years and obviously her thoughts as well with her own. Hmm. Well, it's an emotional series of decisions, and I'm not sure there's a wrong way or a right way to do it.

It's whatever you guys sit down and come up with is the right way. I don't think there's an immoral or a moral issue or an ethics issue. I'm old school on kids. And so our kids understood when they were growing up that the number one thing in my life was not them. It was their mother. It was their mother. And they get their second right behind their mother. But don't get between me and your mother. That won't work well for you.

And so were I to remarry, if Sharon were to pass away, I would have the same concerns that you've got. But my first goal would be to take care of my wife. Sure. And so my second goal would be, if there's anything left, we can help the kids. But they're supposed to be grown-ups and on their own. Correct. And I agree.

I guess more of a technical question, too, was, you know, maybe not. I have a home that's paid for, and she has a home that's still got a mortgage on it. Other than that, we don't have any debt. I have 401k in my retirement and all that um basically she has basically her home is her asset that she's been thinking of leaving to her kids or her child you know but someday or it'd be her really her only asset that i'm going to combine my home sell mine entirely and put all of that into hers they'll start to pay off a big chunk of the mortgage and do some improvements, and then we work together.

Yeah, which will change her plan. That would change her plan. If you're going to be living there and she dies and the house is going to her kids, she's going to make her new husband homeless. Correct. After you put money in it. Is there a way to, yes, I guess that's a way. How do you lay things out where, I't know i guess to put our mind at

ease i'm not really sure how to word that where you know things will be there's not a there's there's um i mean you could you could start using a bunch of trusts and have putting things into a trust and the trust has certain terms to it and you're going to spend a ton of money on that um and um but i i think what you're feeling is a natural tension and i would feel the same tension if i were in your shoes and i'm validating that but i think the two of you have got to decide okay what is more important to the two of you if you're going to take several hundred thousand dollars dump it into her house right and now it becomes our house oh but wait it's going to her kids well that's screwed up that's going to create a problem and so maybe her plan is going to change now you know yeah maybe her new husband is going to get the house if she does and really and my my thoughts were whoever goes first obviously

the other person that's everything is theirs and then when they're gone it can go you know three ways to everybody and divide it up however you know yeah or you can leave the portion that was going to be her house to her kid and the portion that was going to be your stuff to your kids i mean there's no there's no right or wrong thing and it's not wrong to leave the house to her kid if she wanted to it just leaves you homeless and it's really weird it feels it feels awkward you know but i have seen that i've seen where the the step parent gets kicked out upon death yeah and it can be really um emotionally strenuous that's a nice way of saying it yeah so i i think that what i want to encourage you is really push through and don't the problem

with the other plan is okay you leave it all to her she leaves it all to you if you don't do that in a trust that states how things are going to be distributed then the surviving spouse could change their will after the death of the like say she passed away first she left everything to you four years later you're getting married again you could change the whole will again and her kid ends up getting nothing you legally legally i'd be immoral it'd be unethical for you to do that. But legally, there's no way to keep that from happening except to dump it all into a trust upon death. And the trust has certain terms. And the terms are the distribution, you know, maybe based on the past evaluation to the kiddos upon your death or something like that. Because you're not going to be able to undo those trust terms. So you'd have to see an estate planner to do that. That would be a mechanical way,

a tactical way to pull it off. Now, Dave, would it be simpler to turn this into cash? Let's say they sell the property and she would get that amount, let's say, of the equity as it stands today in an investment account. Would that simplify things? well she's i mean then he's buying the only house because they have two houses right now but paid for one in the mortgage one yeah but i'm saying the uh either way she's either got her cash sitting over here to the side but if she passes away she's just gonna leave that cash nothing to her husband you know everything to her kid i you know so the key is there's there's a lot of ways to skin this cat but we have to be in agreement with both spouses which is the hardest part yeah and uh and just promising that you'll do it in

your will is not binding legally i'm not an attorney but you'll find that out when you go sit with your estate planning attorney that's what they're going to tell you. So, but leaving it into a trust, you could do that. You could set terms of the trust and it's locked in. There's nothing you can do about it. If I was in their shoes, I'd sit with the estate planning attorney, have them lay out all of the options, and then we agree which is the best route. Yeah. And then, but here's the thing. Part of what you're struggling with is before they met, her children were her everything, even though they're grown.

His children, since he's divorced or his first wife passed away, whatever, his children are his only concern, priority-wise. And this new relationship changes the priority. The spouse now takes that seat. It challenges the priority position in your emotions and so that that's the hard thing to walk through and it's very real. I mean I I haven't had to do it thank God but um but you know it is a very very real thing it's it's um you know but you I'd like to think that I would want to make sure my new wife was taken care of before I worried about my grown kid. You'd hope the kid would understand, but I'm sure it causes relational turmoil.

I don't care. I don't care. I mean, it's, you know, what's the primary relationship? Who's your first team? Then who's your second team? And that's what we're talking about here. And so the kiddos growing up understood their second team. You know what we're talking about here and so the kiddos growing up understood their second team you know we love you they're the b team and we'll take a

bullet for you um but but you know you know your your mom's coming first your mom's in front of you in priority that's how i do i love the idea of the kids being so self-sustaining they're not needing whatever's on the other side yeah and that changes the whole equation when somebody doesn't feel entitled to it or need it the kid says well that was my one shot at home ownership was getting mom's house and i ruined it well they feel like that dad's assets are somehow they're entitled to them they're not entitled to them you have absolutely no moral or ethical obligation to leave your children money. So your kids doing heroin, don't leave them money. You'll kill them because you will leave them enough to buy enough heroin to kill themselves.

So, you know, if you're, you know, whatever other fill in the blank of any misbehavior said misbehavior, you will magnify the misbehavior. So I am under no obligation to leave my children money. And by the way, that's very clear around our place. They're grown, and we're like, you know, I manage these assets for God. If you're not walking with God, then you don't have the opportunity to manage his assets. Boom, you're out. Sorry. Sorry, Charlie.

Just like that. Charlie. Yeah. King Charles. Rachel's smallest, yes. Just like that. Charlie. Yeah. King Charles. Rachel's smallest, yes. And he is a king. He sleeps on a queen bed already, so that's the most impressive part. I'm just saying. That's a neat question, Michael, and I struggle with you on it, but I encourage you to get closure on it.

Don't just assume, because you know what that does. Yeah. This is The Ramsey Show. George Campbell Ramsey personality is my co-host today. Thank you for joining us. Open phones at 888-825-5225. All right, America, ready for a pop quiz? What percentage of Americans say they live paycheck to paycheck?

Oh, pick me. Pick me. Oh, oh, the big guy in the front row. That's me. George. I'm going to go 7 out of 10. Yeah, this survey says 65% say they do. Six and a half people out of 10. There we survey says 65 say they do six and a half people out of 10 there we go half a person yeah and the um you know i've heard as high as 78 actually do so somewhere around

seven houses out of 10 on your street have too much month left at the end of the money looking good and broke broke broke sitting at a stoplight burning gas they bought on a credit card or worse electricity that they financed on a credit oh yikes pick it on george here that's even worse yeah so you can stay stuck in the cycle paycheck to to paycheck, rat in a wheel, or you can change something. Stupid has a gravitational pull. Once you get stuck in the orbit around stupid, it's hard to break the orbit. And you just keep going and going and going and going. And you're the wrong kind of ever ready bunny, right?

Just a rat in a wheel, just going and going and go no traction living a life of mediocrity no hope not fired up that's most people you don't want to be like that let me tell you how you get out of an orbit even if it's orbiting stupid you have to expend energy to break the orbit you have to break the cycle break the family curse break the cycle, break the family curse, break the way you grew up in the way you look at things, the way they talked in your neighborhood, the way they, the kids I hung out with at work. Well, little man can't get ahead. Thank God it's Friday. Oh God, it's Monday. We're all just stuck. Sure hope we can elect a president who'll fix my life, because I'm not going to do anything about it.

You grow up around that, man. I'm telling you. That's the worst country song ever. Eeyore is your spirit animal. I mean, come on. Seriously. Yeah. So, to kick off the year, we're going to help you.

We're going to host a free live stream this Thursday, January the 11th at 7 p.m. Central. 352,000 people have already registered. It's the largest live stream we've ever done. It's officially the largest. It's me, Dave Ramsey, Dr. John Deloney, Rachel Cruz, George Camel to my right, and Jade Warshaw are going to talk about navigating money anxiety, bad money habits that keep you stuck and how to break them, practical money tips that actually work. We're going to help you break the cycle, and we're going to give away $10,000.

Ten people are going to get $1,000 each during the viewing. You have to be watching or you're not going to get it because that's going to be part of the deal, okay? So if you want to sign up, you want to watch, we would love to have you. This Thursday night at seven o'clock, breaking the cycle. You go to ramseysolutions.com slash break the cycle. It's completely free, by the way. Completely free. Hello.

Did I mention it's free? It's amazing. And it's going to be about an hour long. So I'm just picturing if you just spend one hour with us hanging out on a free live stream, it could change how this whole year goes for you financially. And if we can change how you think and how you look at this, then it'll change what you do. And if we can help you change what you do, then you're going to change your results, and your results will change your life.

Now, we're not going to change your life. You're going to go do it. You're the hero in the story. We're just going to show you how. We really know how to do this. We're going to break you free from the orbit and get you on a different path yeah just just say you know this is you've been believing some stuff you didn't need to believe you you're better than your belief especially going into an election year i feel like everyone just gets angry everybody's worried

about inflation the anxiety is so high out there they're worried about interest rates man i'm worried about is the market going to crash i'm worried about this worried about that and let me tell you what we can show you what today we can show you the process and it's it's not magical it's not get rich quick it's not easy i mean we're going to teach you important things like live on less than you make you ready to do that there's a whole new idea concept congress can't grasp nicola is with us in jacksonville florida hi nicola welcome to the ramsey show oh mr ramsey thank you so much for taking my call hope all is well with you um so i i in my 20s i listened to your uh read your books and that's purchased a home at 27 um however i lost my job after 10 years and i sold my condo in 2016.

I live at home. I'm now 42 and I created a lot of debt for myself, but I want to purchase a condo in 2025. So I just wanted your advice in a strategy on how, what, what debt to pay down first. Um, I have $10,000 in total debt, um, three personal loans, three credit cards, and I have $45,000 student loan debt. I'm still in school seeking my master's, and I'll be done at the end of the year, so I'm not currently paying that. Right now, I have $36,420 in my 401K. I know I borrowed from my 401K $20,000 to pay off my debt, which I accrued again.

So right now, biweekly, I'm paying $171.94 at 4.5% interest on my 401k. All right. So what is your total debt outside of you don't have a mortgage now, so what's your total consumer debt? 10 plus 45 plus 20 on the 401, right? Yes. 75? 65? Yes. 75? 65?

No, the 401 is $36,420. No, the loan balance. The loan on the 401 is 20. Oh, I'm sorry. $14,000 left to pay. Oh, 14 on that. Okay. Yeah.

And it's 171 by weekly on my paycheck and a 4.5. All right. So you got about $70,000 in debt. And you make what? Right now, it just got raised, so $60,400. I wasn't making much, but now I am making more, and I recently paid off my car in 2021. Unless your income changes, you're not going to buy a house in 25.

Right. What's your master's in? A condo. I wanted a condo. I work in education, so obviously you don't pay that much in education. Will this master's increase your income? Not much. Then why are you doing it? It's required.

Well, it's required. Right now I'm not paying for it. The school pays for it. Okay. Because I work in education, it's required to have a higher degree. But the school pays 90% of that. Nicola, you need to pay off $70,000. Save up an emergency fund and save up a down payment.

Well, right now I have $3,500. I just don't know if i should but i have three personal loans um thirty five thirty five twenty five yeah and you have forty five thousand student loan debt and you have twenty thousand dollars on a 401k you have seventy thousand dollars in debt okay i didn't look at it like that but yes so here's the hard truth you're not going to be ready to buy a house a year from now. It may be two or three years from now. Wow.

We have to get rid of the debt completely. You don't have $70,000 coming in in the next 12 months. You have $60,000 coming in, and you have $70,000 in debt. Right. Yeah. What? I was thinking maybe I should pay off my save up this year, pay off my 401k. The $14,000 just flat out paid off. Or if I should pay the high interest rate that I have on the personal loan. list all of your debts out from smallest to largest, make minimum payments on all of the debts except for the smallest one, and we're going to attack that one with a vengeance,

as much extra on the principal as you can throw at it, and that might mean you're doing side jobs after your master's program, after your full-time job. And you complete your master's when? At the end of this year. So 12 more months? Uh-huh. Okay.

Do you have any time to do tutoring while you're working on your master's? Not really. I mean, the job is pretty demanding. You know, sometimes I do have to work weekends. Now, you said you're living at home with your parents? Yes, I do. Yes. Okay, so you have almost no expenses.

What are you having to pay for right now? The loans that I have and the credit cards um i do give them contribute six hundred dollars but it's the loans that i have a personal loan you know situations happen and obviously i did that but okay you're gonna have to draw a line in the sand and quit borrowing money i don't hear any more about your situations you've situations situationed yourself into your parents' basement. You got to quit situationing. So cut up the credit cards, get yourself on a beans and rice, rice and beans budget. Anything you can do to increase your income, like tutoring, let's go do it. And let's start attacking these debts just exactly like George said, smallest to largest. And it's going to take you a little while to clear $70,000 in debt. When you get that clear, you can start talking about buying a house.

You may go rent something in the meantime, but I wouldn't buy until you get this mess cleaned up. I'll see you next time.