The Ramsey Show - App - Wealth Is Best Built Slowly and Intentionally (Hour 3)

Episode Date: January 26, 2023

George Kamel & Jade Warshaw answer your questions and discuss: Paying your way through college, What to do with inherited property, Combining finances after marriage, A deep dive on Baby Step 3, Dealing with an expensive mortgage. Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Want a plan for your money? Find out where to start: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

МУЗЫКАЛЬНАЯ ЗАСТАВКА Live from the headquarters of Ramsey Solutions, broadcasting from the Pods Moving and Storage Studio, it's The Ramsey Show, where America hangs out to have a conversation about your life and your money. I'm your host, Jade W Warshaw and I am joined here by the amazing, the incredible George Campbell. Last time you were illustrious. I don't know what happened there. Oh, we went down a notch. That's fine. We're taking your calls today. You can give us a call 888-825-5225. We'd love to take your questions, find out what's going on in your world,

what's going on in your life. We're going to do that with Carly. She's here from Chicago, Illinois. What's going on, Carly? How can we help? Hi, I'm starting nursing school in April, and I was really just wondering how do I pay my way through college? I love it. Nursing school in April. So do you know how much it's going to cost? It's going to be a little under $40,000 because it's like a two-year accelerated program. And $40,000 total over those two years? Yes. Okay. So $20,000 a year. And what's your current income? Are you able to work while you're going through the nursing program?

Yeah, I am. I'm still able to work about full-time because I can do remote work if I'm not able to work while you're going through the nursing program or? Yeah, I am. I'm still able to work about full time because I can do like remote work if I'm not able to come into the store where I work. And I make about like $35,000 a year after taxes. So that's your take-home pay. And do you have any money saved right now? I have like $2,000 saved up. up okay that's not a bad place to start so i love that you don't want to take out loans and that you've taken loans off the table that's that's thing one right george so at this point it's really just making sure that you are paying your way through now you know i think that with your income let's see how much disposable income after all your bills are paid and after everything's done what do you have left at the end of the month margin wise? About $800.

All right. So there's where we're going to have to pick it up just a little bit because we got to pay $20,000 a year on this thing. Yeah. When are those payments actually due? I have my cell phone bill, which is due at the beginning of the month and same with a loan i have right now it's just a personal loan i got like a year ago when i first turned 18 i think we're talking about the the college how how your tuition yeah when do you have to pay your tuition is that is 20k due in april when you start? Oh, no. They do, like, payment plans and an off date that I can choose, like, what date I want in between. Okay. Like, what date in the month.

Okay, as long as you have it paid by what's the deadline point? I have to have three grand saved by March 23rd, about. Okay. And is there any urgency to jump into this program? Is there something where maybe we could pause, stack up cash and then start it in the fall? Well, not really.

No, they do like, it's like quarter. So they do like April and then there's one like starting at the, like in the summer. And then there's one starting in like the fall too. Oh, great.

Yeah. I mean, it's great. There's options here. You don't necessarily have to start, you know, here coming up in April because the fact is you don't have the money yet. And if you need 3000 to start,

I want you to have $3,000 in cash to start. I don't want you to have to go into debt at all to do this. So if I'm you, I would put this on hold and get your financial situation in place, get it a little bit more firmly planted so that you can have the money saved up. and get your financial situation in place, get it a little bit more firmly planted so that you can have the money saved up. And if you wait, you know, if you decide that, hey, you know, I'm going to wait a full calendar year or I'm going to wait till fall, you might have more than $3,000 saved up. So you're feeling even more comfortable about

this. How does that sound to you? It actually makes a lot of sense. And it also gives you time to really research, are there any scholarship opportunities, grant opportunities? My employer offered tuition assistance. Is there another employer where I could still work remotely, make more, and they offer tuition assistance? So I want you to just have some breathing room to dig into all of that and do some homework so that we can cash flow this thing, and you can graduate completely debt-free as a nurse. I love that plan. You know, I love that she's wanting to go to school, but I love that she wants can graduate completely debt-free as a nurse. I love that plan. You know, I love that she's wanting to go to school, but I love that she wants to do it

debt-free, but sometimes you got to put those things on hold. Yes. Hang on the line, Carly. I'm going to send you our best-selling book, Debt-Free Degree. It'll walk you through all of the options, give you some creative ideas, and give you some confidence in this plan. So hang on the line. We're going to get that book over to you. I love that. Thanks for the call, Carly. Let's go over to Odessa, Texas. We've got Courtney on the line. Courtney, what's going on in your world? Well, my dad passed away a little over a year ago and he left me some property. And I'm just kind of curious what you guys advise I should do with that. Wow. So sorry for your loss. How old was he?

He was in his 50s. Wow. That's tough. That is tough. So tell me a little bit about the situation. You know, you said he left you a property. What type of property is it? Is it just land?

Tell me about that. Well, it's a few properties. One is just, it's five lots and it has some like kind of rundown trailer houses. And then it has a few like RV camper kind of things on it. And then, um, two commercial properties and then, um, another, uh, property that is like seven lots and that has like four houses on it. Wow. Wow. What is all of this worth combined? Um, I'm not a hundred percent sure, um, in regards of like a total amount, but I'm guessing somewhere around maybe like with the commercial properties, I think those are maybe $130,000. And then the land is probably, I don't know, maybe a guesstimate around like $20,000. And then the properties that have the houses on it. I think that my dad paid

like, it was like 15K for it. And so it's probably appreciated in value some, but I'm not sure exactly how much. So like maybe like 165, 170 for the lot of it? That's what I'm thinking somewhere around that. Is any of it cash flowing currently? No. Okay. Are you wanting to hang on to this and deal with it or would you rather just sell it all and use that money to propel your own financial journey? What excites you more? I feel like I'm living in one of the properties right now. And so I kind of want to hold on to that at least because I don't have any mortgage or anything. I just have, you know, like the utilities and the property tax annually. That's great. Do you have any debt?

I do have some student loan debt, but I'm working on paying that off. How much debt do you have left total? Right now it's at 36K. All right. And what's your income? I make about 38K a year. Okay. So what if you worked with a real estate agent and said, hey, for now I'm going to sell one of the properties and clear my debt and get that fully funded emergency fund in place? Would that make you feel better to free up a payment and have that pile of money there? I think it would, definitely. I would start there. And as you feel comfortable, start selling more of it off

unless you love a piece of it and it's cash flowing well, then hang on to it. But this is a legacy that's left for you to manage. And I think your dad would be proud for you using it to propel your financial journey, however that looks like, whether it's you keeping it or selling it. I think so too. Man, what a great legacy to leave.

And it's going to clear her debt and leave her better off for it. This is The Ramsey Show. សូវាប់ពីបានប់ពីបានប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពី you're listening to the ramsey show you know george anytime the price of eggs is making headlines you know you're dealing with a wacky economy. But even news about layoffs, an on-again, off-again recession, the crazy high interest rates, there's no reason to give up on your money goals. We're here to give you a plan for your money. Join us on the Building Wealth Live Tour. As we show you how to build wealth and keep it, you can join personalities like Dave Ramsey. We got George Camel, Rachel Cruz. I'll be at one of those in Indianapolis. wealth and keep it you can join uh personalities like dave ramsey we got george camel rachel cruz i'll be at one of those in indianapolis then on down the line we'll be there in austin on february 23rd and next we're heading to the building wealth salt lake city edition on april 24th

and like i said it's just a mix-up of the personalities we got dave we got george we got rachel cruz christina ellis myself ken coleman john deloney and finally we're closing out our the personalities. We got Dave, we got George, we got Rachel Cruz, Christina Ellis, myself, Ken Coleman, John Deloney. And finally, we're closing out our tour in Anaheim on May 2nd. Guys, this is my favorite part. Tickets start at just $49. And all of our fall Building Wealth dates are sold out. So you don't want to wait to get your tickets. Guys, go to ramseysolutions.com slash events to reserve your seats for the Building Wealth Live Tour. Let's do this. Where in the world is Carmen Sandiego? But it's Dr. John Delaney.

Which event's he going to be at? You don't know. Where can I see him? You don't know. You just don't. You have to go to the website and find out. It's like the ball that goes through the cups. People have been like, can't wait to see you in Anaheim.

And I'm like, oh, I won't be there. But say hi to Dr. John and Ken for me. It's a great lineup. I'm really, truly excited for this, George. It's going to be great. We can't have 19 of us out there all at once, you know? That's also true. That's also true.

It gets unwieldy. Well, the phone lines are open. Give us a call. 888-825-5225. We got Jake on the line in San Antonio. What's going on, Jake? Hey, guys, how are you doing? We're doing good. How are you? I'm doing wonderful. So let me get right to it. My wife and I just got married.

And the other night we were doing a budget and we're trying to combine our finances. And growing up, she just, you know, she's always been frugal with her money saves her money she's excellent with it and we're just trying to figure out the best way to like if we should just put one savings account and checking account she makes it very um she wants to have be able to spend her money and for me able to be able to spend my money if we want to buy our own personal items and we're just trying to figure out the best way to go about it yeah i love that i love that you're having these conversations early and that you're trying to get on the same page that's really great um can i just ask before i go too far into it do you guys have debt at all

so she has zero debt i have 12 $12,000 on a credit card. Okay. And what's you guys' income looking like? Right now it's about $112,000. That's a good job. Awesome. And do you guys have any cash or anything saved up anywhere for savings? Well, and that's another thing that I feel kind of bad about. You know, it's not bad necessarily, but guilty because I'm bringing debt to the table.

Right now we probably have about 55,000 cash. Oh my goodness. That's amazing. So why not just pay off the credit card today? Well, that's the thing, man. We just got married and she, I don't expect her to pay off my debt, you know? Well, here's the thing. When you guys got married, you took all of her and she took all of you. It's not just the Jake that, the parts of Jake I like and the parts of Jake that have no debt.

Do you think she's actually like, hey, I want to use my savings that I worked so hard for to pay off your debt? Has that been the tone or is she happy to pay off the debt and set you guys up for debt freedom? So she wants to be, you know, I just got her introduced to, you know, kind of like the baby steps and everything. I've been following it for a few months now. I've been paying off because I started about $15,000 maybe a couple months ago and I just got a slight pay increase. So we're doing fine. 15,000, maybe a couple months ago. And I just got a slight pay increase. Um, so we're doing fine. It's just that, you know, growing up, I think she dealt with a lot of debt in the household. So I think she was raised not to your debt is your debt and his debt is his debt. And it's not like, Oh, I want to, I want to have my money and you should have your money. She is all for combining finances.

And I guess it's two separate questions because, yeah, I know we should just take the money and pay off the debt. But then do we keep a checking account where both deposits go into? And then do we each have our own where she wants to get her nails done or shop for clothes? Yeah, that's a great question. And, you know, yes, when you're doing your budget and you're combining finances, I, for one, do think that you should have one account where everything goes in the pot together, right? Everything's in the pot together. And then when you create your budget, which, by the way, I suggest in every dollar budget, you can go through and put your line items on there. And you're taking that all of that income that you have, and you're dividing it up, you're spending every dollar

before the month begins. And that's when you can decide, okay, yes, we both know, we're paying the mortgage, we both know we're paying, you know, whatever for the cars, and we're paying for our phones. But you also get to put line items in there for the things that are important to you. So like Jake's haircut, or you know, your wife's, you know, girl's night out, whatever it is. Self-care. Self-care. Fun money. Fun money. Yes. You can create those. Yeah. You know, you put a hundred bucks on there for fun money for the two of you, split it out 50-50 and you don't have to necessarily say exactly what you spend it on. So there is some freedom there, but at the same time, it's still a shared pot. Does that help you at all? It does. It does.

I really think you just need to sit down and have a conversation with her about this, because until you do, you're just guessing. And my guess is if she values financial peace, she values frugality, she's probably going to value you guys being debt free. And until you sit and ask her about it, you're really just guessing. So Jake, I hope that helps you. Thanks for the question. If I'm you, I think you guys need to be debt-free today. Yes. And you're still going to have plenty of money left over, but get one joint checking account. You can have a savings account attached to that. And if you want to let that money grow, you can put the savings in an online high-yield savings account to let it grow at 3% or 4% these days. So that will help you guys get this thing streamlined and the budget will tell you how that dollars, how those dollars get spent.

That's great. Thanks, Jake, for the question. All right. We got today's question of the day, George, are you ready for this? I'm so ready. Today's question of the day comes from Ray in California. He says, I'm 30 years old, make 120K per year, and I don't have any debt. I moved to the USA four months ago, and I'm looking to buy a car. I was looking at used cars initially,

but the car prices were 20,000 more as I was looking for a reliable car. As the used cars are so expensive, I started looking for new cars, and I finally found a Toyota RAV4 for $30,000. The monthly payments would be $517,000 at an interest rate of 8.5%. It is pretty high because I don't have a credit history here. What should I do?

I'm planning to refinance my loan after six months for a lesser interest rate once my credit gets built and plan to clear the loan as quickly as possible. Famous last words. Oh my goodness. I just keep thinking of that John Mellencamp song. It's like, ain't that America? I'm like, this guy is already conforming to this American culture. It's like, welcome to America.

How can we sign you up for payments, my friend, at 8.5% interest? We did my guy wrong. We did him wrong, didn't we, George? Like he's doing so well. He's 30, making $120,000, doesn't have any debt, and he's already going, I want to go take out a loan. There's a simple answer here. Pay cash, my guy. And the used car is 20. Yes, used cars are expensive. They're not going to be half the price necessarily. If you want to get a Toyota RAV4 that's a few years used,

that's your best bet because someone else already took the hit on that depreciation. Oh, yeah. That's never a new car, George. Not when they lose 60% of their value in the first four years. They drive off the lot. While you're paying 8.5% interest, it's losing percentage points every day. Oh, and by the way, you're on the hook $517 every month for years and years. Draining, just draining the wallet, stealing your biggest wealth, your biggest wealth building tool. So our parameters for this on new cars versus used cars, only get a new car and pay cash, by the way, if you've got a net worth of a million bucks or more. And the reason is simple. You can afford to take that hit on depreciation as that car becomes less and less worthy. As you drive it off the lot,

it becomes a used car that's already less a thousand bucks less than you paid for it. I know, right? Just save up and pay cash. My husband and I, we just bought a second car cash. And I got to tell you, we had the money earmarked for it.

And when we bought it, it kind of felt like it was free because we just drove off the lot andmarked for it. And when we bought it, it kind of felt like it was free. Because we just drove off the lot. And it took eight minutes. We just rode in there, wrote a check, and got out. And that car ain't getting repoed. You own it free and clear. Not a payment in the world.

And it's used. Let me tell you. It's used, but it's ours. And it's paid for. This is The Ramsey show we're taking your calls about your life and your money so you can give us a call here today 8 888-825-5225. But George, before we get to the phone lines, there's something I kind of want to talk about because I see this a lot. People slide into my DMs and they ask questions about the baby steps. And I have to say,

by and large, the questions that I get the most actually have to do with baby step three. And I think what it is, is you, you know, you've done baby step one, you've gotten your $1,000 saved, you've done baby step two, you've just like rocked it out, right? You've paid off all of your debt and baby step two, and you're thinking, you're thinking like, okay, baby step three, that's going to be just, just a breeze. I'm going to breeze through that. Finally, I get to take all this money money put it back in my pocket and they are shocked to find out that it's not as easy as you thought it was gonna be no and in some ways it's it's hard can i dare i say i found it to be harder it was harder most people say they struggle with

this one the most out of all the baby steps baby step three feels the most difficult because when you're paying off debt uh it's fun yep and so here's how i like to think about it well it's fun in the sense that you feel the progress it's addictive you're celebrating yes okay baby step three you're not like woo another thousand dollars in the savings account i thought you should i thought i was gonna feel like that george but comparatively baby step two is a thrill and baby step three is a pill. It's just like, come on. Come on, George.

We already work so hard. We're tired, man. We got to keep up the side jobs. I'm still on the thrill pill part. So let's cover some basics here when it comes to baby step three. We say it's saving three to six months of expenses. That's a fully funded emergency fund. Yep.

Now, expense is not income. That's important. Right. This is where people get tripped up because they're like, oh my gosh, I have to save the whole amount of my budget six times. I have to save my whole monthly income six times. That's not it at all, George, right? Can you break that down?

Yeah. So if you look at your budget, not all of your expenses are mandatory. If there was an emergency, if you had a job loss, you had to replace the roof, right? You're not going to be living how you have been living. You're not going to be putting 500 bucks into the sinking fund for the car. You might cut some of the subscriptions. You might cut some of the self care, the fun money. And so look at what your bare bones expenses are for one month in that budget. And you can add, if you, if you're a gym rat and you gotta, you know, you can't skip leg day, leave the gym membership in there as part of your monthly

expenses. Then we can multiply that number by three, four, five, six, which takes us to the next part, Jade. Well, is it three or six? What do I do? Well, here's the thing. You know, it really depends on your lifestyle. There's several things that you want to take into consideration here. If you're single and it's just your income, it's just you, I would do six months because if something happens, you're it. You're it for you, right? So if you lose your job, if you have something unexpected come up medical wise, it's all on you. So let's do six months for if you're single. We want to think about health, right? If you've got chronic illness in the family, I would lean towards six months. If you are self-employed, you're on commission, you have a regular income, let's lean towards six months. Maybe you have seasonal work

like landscaping. If you're a single parent, I would lean towards six months. That's right. If you're married with one income, you might want to lean towards six months. So now the other side of that, flip it to the three-month side. Who should be saving three months? Who can live like that? Well, if you're single and you have no dependents and you have a stable income, think, you know, a government job, something where you're probably not going to get laid off anytime soon. If you're married with two stable incomes, you can lean towards three months. So if you're, if you are a teacher and a postal worker, you should be good. Yep. You can lean towards that three months. And sometimes the spouse may go, you know what? I'd feel better saving four. Then let's say four. Just do it. Don't make it an argument. And you want to know,

I'll take that a step further, George, because I'm the type, even if you're, let's say you're like three months does it for us, but it's just under what your medical deductible is. I'm like, let's get to the deductible. If the deductible is, I don't know, 4,000, 5,000, whatever your deductible is. I'm like, I just like having that so that I know if anything happens, I know that the savings is there. Yes. Look at all of your insurance deductibles, add those up. So your car insurance, your homeowner's insurance, your health insurance, and that usually is going to be close to $10,000 or more for most people. It's a lot. For me, the minimum for most people in America, I'm saying, if you've got $10,000 in the bank, you should be good.

Any less than that and it can put you in a precarious situation. That's right. So where to put this is the next question. I love it. Not the sock drawer. Not a tin can in the backyard buried. We've taken that call this week. We sure did.

So where's the best place, George? You want to keep this liquid. Do not put it in one of these CDs. Don't put it in the stock market. Don't invest it. I like to put it in one of these CDs. Don't put it in the stock market. Don't invest it. I like to put it in a high yield savings account, which right now the interest rates have come way up. Now you can get three, 4% in some of these accounts. I know these are not your 2020 rates. You know what I'm saying? These have gone up. And it keeps your cash completely liquid. So

at any time you can take this cash into your checking account without any fees and penalties. And so that's what you want to look for. And if you're more comfortable having it connected to your checking account with your local bank, that's fine too. The point here is not to make interest because it's not an investment. Your emergency fund is insurance, not an investment. And I like the high yield savings account because it gets it out of your normal accounts. I like that it's someplace else. It's on a higher shelf. You really got to get on a stool to get to it. You know what I'm saying? You can't just grab it all willy-nilly like because some people, George, have a hard time understanding what is actually an emergency.

When do I spend this money? Because boo-boo's getting married and she's getting married in the Caribbean and I want to go. That's an emergency. The latest iPhone 14 Pro Max just came out. Oh, come on, Georgeorge not an emergency these things that we're talking about that's pro shops killer sale does that count no that does not count here's a tricky one jade the dishwasher breaks you can wash dishes george there is this amazing thing

that you can put it's a stopper you can put it in the bottom of the sink and you can actually fill the sink with water and you can put dishes in it and wash the dishes with your dat gum hands george okay did you know did you know and you want to know what here's the thing i'm not saying you can never have a dishwasher again but couldn't you just cash flow it and wouldn't it feel nicer because we know what no one should like to touch their emergency fund. So wouldn't it just feel nicer if you can, every situation you can't, but if you could just hold off and not move at the speed of sound and at the speed of light to pay for stuff and just pay cash. That's right. And there is a few questions you can ask yourself if you're going, well, I'm not sure. Listen, little Jimmy breaks

his arm. It's an emergency. Yes. You get a job loss. That's an emergency. That's an emergency. The car repair that you need to get to work. That's an emergency. So ask yourself these questions. Is it unexpected? That would be like a sudden job loss. Is it necessary? Like the car repair. And is it urgent?

Like an ER visit. If you can say yes to those questions, then use the emergency fund and don't have any shame or guilt about it. It's there to be used for emergencies. But a lot of people go, oh, it hurts to touch it. We worked so hard for that. I've been there.

I have been there. It feels, you know, especially if you, because I know people listening, they're like baby steps. Like they do not want to feel like they're going backward, but something happens. I get it all the time on Instagram. Jade, our roof, something happened with the roof.

Is there anything that we can do? And people, you got to be careful because people will actually start to consider debt again oh gosh instead of considering their emergency fund to the HELOC and the credit card and the 401k loan to avoid touching their cash oh my goodness and George you brought it up so I gotta I gotta play devil's advocate here oh let me do it what did I do i gotta get the right voice uh george what about my 401k you know i'm saying i could just use my credit card if something goes wrong i'm gonna just you know i got a zero percent credit card that's my that's my that's my that's my emergency fund right there george i would uh say brilliant good for you bro but you sounded just like them jade it's hard to

argue with that kind of logic a little bit more you know i'm just gonna pull out a home equity line of credit george because i can get it you know i can leverage my house and i don't have to anytime someone says the word leverage i i lose a brain cell oh man oh my god yeah don't do this you have the cash to cover it so here's the deal it's hard to stay motivated in baby step three it It is. Baby step one, 30 days or less. Baby step two, 18 to 24 months. Baby step three is another six months. Yeah. And you're discouraged.

There's no immediate reward like there is with paying off debt. You're in the middle of the marathon and saving is boring comparatively to paying off the debt. It is. And you're tired of working. And can I just throw this in there? You feel like you deserve it. After you've done baby step two you start being like i did all this i feel i deserve to pull back on the intensity i deserve to to go out and buy me some

new clothes you start feeling that keep the pedal to the metal you're so close and once you're there listen to this you have no payments in the world and a pile of money in the bank to protect you it's a force field against life yes you're finally building for the future instead of paying in the bank to protect you. It's a force field against life. You're finally building for the future instead of paying for the past. We're at Baby Step 4. We're investing for the future. Dangle that carrot. You guys are so close. For those of you that are in Baby Step 3, we are cheering you on. We are here for it.

I think we need to start doing Baby Step 3 screams. Come on. You're almost to the good part. Get that money saved. You'll be investing before you know it. And before you know it, you'll be saying, I'm an everyday millionaire. This is the Ramsey show I'm your host Jade Warshaw sitting next to me George camel with a k with a. Don't get it twisted. And we're taking your calls about your life and your money. So be sure to give us a call today.

The number is 888-825-5225. Scripture and quote of the day. For you have been called to live in freedom, my brothers and my sisters. But do not use your freedom to satisfy your sinful nature instead use your freedom to serve one another in love galatians 5 13 i love that and then charles dickens says this no one is useless in the world who lightens the burden of another profound i like it still hits 200 years later it still hits i love that all right Let's take a couple of calls, George. Let's go over to AJ in Denver, Colorado.

What's going on, AJ? Hey, guys. Thanks for taking my call. I greatly appreciate it. Absolutely. What's going on? I'll just. OK, so my wife and I have been super loyal Dave Ramsey followers ever since we got married.

We got gifted the, what is it? Financial piece or the baby steps. We got gifted the book and we fell in love with it. We have been dead loyal on the plan. Like we have our six month emergency fund. We're invested. We lost you. We have three. Are you saying you have your, you have an emergency fund you're investing in then?

Yep. Yep. We have three kids, um, and we're investing for their college. We have one on the way. And we just got our first house last year in February and we got it on a 30 year mortgage. And we basically, we got into a position to where we're like, okay, we're going to make it a 15 year. We're going to start paying. I think it's like an extra thousand dollars on our mortgage in order to get it all the way down to a 15 year mortgage. And since we have started doing that, I've gotten two pay raises over the last two years and it equated to $60,000 in pay raises. And I'm making $115,000 a year. Okay, that's great. So what's the question today? So the question is our mortgage payment,

when you do the calculation, comes out to be 41% of our take home. And at the end of the month, we're saving $600 and it'll be around 400 when the new baby comes. And I just want to know what you guys would do in my situation because I want to keep the house because I was the general contractor on it. I built it. And my wife's security gland is going off and she's contemplating, you know, staying in it for another year to avoid the capital gains tax and selling it and to try and put ourselves in a nicer financial situation. And I just want to know what you guys would do in my situation. So you're saying you bought the house with a 30 year mortgage. You're paying it like it's a 15 year mortgage.

And by you paying it like it's a 15 year mortgage, it's strapping you because it's now taking 40% of your income. Do I have that straight? Bingo. Okay, so the actual mortgage payment you have to pay every month is not 40%. It's 26% on a 30-year. Okay, well, I don't see this as on fire. Obviously, it would have been ideal to do a 15-year where the payment's 25%, all that. We're already here and we're looking to the future.

This is not a thing where I'm like, you got to sell the house. You guys have no debt except the house, right? Nope, none. And you're investing 15% of your income. Yep. And you're still putting away some money for kids' college. And you're still able to put extra on the house. You're baby step six.

You're just in baby step six. You're chunking towards the house. You're chunking towards paying it off. You're doing right. Of course, we would have loved if you had picked a 15-year mortgage that you could afford to begin with, but this is the hand that you have. And I think that you're playing it beautifully. You're paying as much as you can towards this. Now, when the baby comes and things get weird, you might have to pull back on how much that you're putting towards it. But remember, baby steps four, five, and six, they're about intentionality. You don't have to be, pedal to the metal. I must do it now. You don't have to feel like that. So if you're feeling that strapped, just ease up a little bit, take a little bit of a breath and keep going forward.

You know, there's plenty of people, if you ask us, we're always going to say 15 year fixed mortgage, where the payment is no more than 25% of your take home pay. We're always going to say that. But there's plenty of people who got in the game before they met us, you know what I'm saying? And they have a 30 year mortgage. We don't tell those people sell your house, get out of it and go get a 15. We don't tell them to do that, because this is where they are right now. So this is where you are right now and it's okay. You know, so I kind of want to sell it. Yeah. And, you know, because we want to go on vacations, you know, like we want to, we want to do that. And, and I mean, if you want to also, if you want to sell the house, if you guys come to that conclusion that you want to sell the house, you can, but you don't need to again. And you guys are going, like I said, you guys are going ham

paying double on this mortgage. You don't have to pay double on it. You know, so from that point on, it's really just up to you. Again, this baby step, this baby step six deal, it is not about intensity. It's about being intentional. That's a really great call, George. I love, thank you for that call, AJ. So, I mean, your actual mortgage payment is not 40%. And so I think reassuring your wife, Hey, we're going to be okay. We've got an emergency fund. We can make this payment. We're putting extra on this thing.

We're going to pay it off. And your income is going to go up over the next 15 years. I'm just proud of them for being so intentional. To the point almost of intensity to where they felt like, oh, my gosh, we're not, you know, hitting this on the head. I'm just really proud of them. They're going to be all right. Let's take another call. Let's look at Shannon. She's in Tulsa, Oklahoma. What's going on, Shannon? How can we help today? Yeah. Hi. Thank you for taking my call,

guys. Listen, I've been listening a long time and I have never actually heard this covered on the show. And it's a specific question regarding the, I guess, the downtime between baby step number two, getting everything paid off with the debt snowball and the emergency fund. So basically, in a nutshell, we have a $15,000 emergency fund. Before we finished baby step two, we have a car payment. That is it. We just have a car, the $23,000 car, and we have $15,000 in the bank of emergency fund. And the question is, we both know that following the steps, we should be, you know, immediately putting $14,000 towards that car, leaving $1,000 emergency fund, and then just, you know, hustling like crazy to pay that off. Right.

The question though is the problem with it is, is we, we are very nervous about giving away all of our, our savings, knowing that we are in a very, very busy season with, we have an HVAC that's on its way out probably this next summer. We have a girl that's going to be a senior in high school. We've got proms, we've got senior pictures, we've got trips. What's your household income? on its way out probably this next summer. We have a girl that's going to be a senior in high school. We've got proms. We've got senior pictures. We've got trips. What's your household income? Our household income is right at $100,000. And like I said, the car is $23,000 of that, and that's our only debt. So isn't there a way that you could knock out this debt and hurry like hustle hustle up and save up you know your three to six months beyond that after you've paid this car off and then if as other

things come start to cash flow those things as well we've done the math on what you know if we if we paid this car if we if we hustled and got this this car paid off we've kind of run the math on okay here's how long we think it would, because like I said, we've only got 14 to put towards the 23. So we've done the map on, okay, now, you know, if we hustle, I've already got a side job, so that's already going. If we hustle, we know it's going to take us approximately eight to 10 months to clear off the rest of the car from the 14 to the 23. Well, then that starts day one of happening to build an emergency fund back of 15 grand. That's going to take by mass another probably 10 to 12 months.

So we're putting ourselves out there for almost two years. You make six figures. How is it going to take you that long? I think you guys need to tighten up your budget here. You guys have a great income and you need to tighten up your budget. Look, Shannon, I'm not trying to hate on you, but the things that you described, that's just called life. That's everybody's life. And I can tell you the folks that work the baby steps, they have college coming up. They have ACs. They have all of the things that you're talking about

and they still choose to work the plan and you can too. It's going to work out for you. All right, guys, that does it for today's show. Be sure to join us next time. And remember this, when it comes to changing your life and your money, you can tell me you won't do it, but please don't tell me you can't. With Christ, all things are possible. This is The Ramsey Show. Hey, what's up, guys?

It's Jade. Look, 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 the get started button. We'll help you figure out the best next step for you based on your specific situation. That's ramseysolutions.com and click get started.