The Ramsey Show - App - What Do I Do Next? (Hour 3)

Episode Date: November 6, 2023

Девочка-пай 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 amazing relationships. I'm Ramsey personality, George Campbell, joined by Jade Warshaw. And we are taking your calls this hour at 888-825-5225. You give us a call, and we will give you our opinion. That's how the show works. I would call it advice, but some people may disagree, Jade. I think

your advice is always spot on. I would say the same about you, George. I try my best. You know, I flub some. I'm not infallible. None of us are. Look, we make mistakes. But we try. Alright, Jonathan is in Baltimore. Let's give it a go, Jonathan. How's it going?

Pretty good. How are you guys doing? Pretty well. How can we help? So I have a question. So my wife and I are currently on Baby Step 2. We got through Baby Step 1 pretty quick. I was able to do a side job pretty much after that first lesson within

a week I had that. Amazing. That's great. So we're going through and I know it says to stop your 401k contributions to help pay off your debt. Now my question is, get a a quarter percent match up to four percent do i stop getting that free money and and stop putting in my four now i also have a 401k loan that i'm paying on but yeah um the answer the answer is yes to your question we would tell you to stop that match and stop contributing but it's temporary temporary. And look, I get it. It's free money. The math nerd and everybody goes berserk when we say that. But the point here is you're going to free up all of your income at that point. And what you need right now is income in order to pay off your debt, right? That's the whole point. Baby step two, it's laser focus. We're paying off this debt as quickly as possible. And here's the

thing. Most people are out of debt in two years or less. And then at the end of that, not only after you've built up your savings, not only are you going to be investing 4% with a match, but you're going to add 11% to it. And you're going to do that for the rest of your working job. Now, if you're telling me you're not going to make up what you lost in two years or less at that point, do you see what I'm saying? We're playing a long game here. Right, right, right. No, I'm pretty sure that I would. And again, I don't want to be ish, you know, I want to be on board. So, you know, I had a couple of people say, well, it's free money, you know, but, you know, I mean, luckily my wife and I, well,

not including our house, we're probably about $30,000 in debt. And that includes an automobile that's about $25,000. What's your household income? I would say combined roughly it's probably $160,000. Wait a second. You got $30,000 in debt and you make $160,000. You're going to be out in like three months. You're going to be out so fast. So this is a non-point point.

Okay. If you actually did the math on what you'd be losing and also the interest you're paying on the debt if you hang on to it longer with less going at the principal, it's negligible. But what will help is the fiery intensity you feel when you go down to 0% and you clearly love investing. And when you go to 0%, you're going to be like,

I want to get back to investing so badly. I'm going to take on three jobs to get out of this debt faster in two months instead of three. And that's the kind of fire that will carry on and will allow you to hit all of your financial goals. And like Jade said, you're going to quadruple your investing six months from now. Now, you quadruple that after the three to six months. Uh-huh. But you're going to do all of that. You're going to do all of that in the next 10 months. Right. You're going to pay off this $30,000 and then you're going to save up three to six months. Whether you do three or six months

is determinable on what your situation is with your income. Sure. How old are you? Sure. I'm 46. Okay. So imagine 47-year-old Jonathan, who's investing 15% of $160,000 household income, which is incredible, and then do the math 20 years from 47 to 67, what that turns into. And you'll see why we want to light this fire under you to stop this measly 4% temporarily to go way up to 15%. And then soon enough, in that time, you're also going to pay off the house following this plan, which means you're going to invest even more than that. In your greatest wealth building years, when you have the highest income and catch up contributions after you hit 50, you're going to be crushing it.

So I would ignore your friends saying, dude, you're an idiot if you don't take the free money. Because guess what? They're probably broke, man. Yeah, and I was about to say. I don't want to assume. They're idiots. We don't know that. They could be very wise billionaires.

I don't know your friends. That's right. They're probably great people. But the point is, I liked what George said, and I think it's so true. When you go through this process, you do need to feel a little bit of that ouchy, like that sting. Like, duh, why did I do that? Yeah. You know, that's the lesson learned right there. I started, I started 401k when I was much younger, but then, um, for whatever reasons, you know, it got emptied out and I restarted a few

years ago and I've been watching that number now granted hasn't been growing like it was before but and that's it is an ouchie to me because yeah you know as I'm getting older I'm like I want to be able to retire at a reasonable age you know and so it is a little bit of an ouchie to me. Well, Jonathan, you just taught the lesson for us, because here's what happens when you start investing before you've paid off your debt and before you have an emergency fund. What happens is your investments, your retirement investments become your emergency fund. It becomes the thing that you dip into when you need a little bit of extra cash. And like you said, you start a Roth, you take the money out.

You start your 401k, you take a 401k loan. And that's why we teach it this way, because that way you're on the firmest financial footing that you can possibly be on. You've got no debt, right? So the money that comes in is yours. Then you've got this money set aside that's totally liquid. It's three to six months of expenses in case you do fall on hard times where it's like, OK, look, I have to get a new refrigerator. And suddenly you can just pull it from that money as opposed to having to dip into

your 401k where you're then laden with fees and penalties. Does that make sense? So that's the thinking behind all of this. And I love that you called in because you're kind of a prime pupil for this, because I think I heard you say that you do have a 401k loan out already right yeah we we bought our house um last December and we had two dogs and it didn't have it didn't have a fence so I borrowed out of my 401 so that I could put the fence up to protect the dogs I'm sure probably could have done it myself, but still. So I am paying on that. So I still have to, I mean, they'll deduct that from my, you know,

it's a biweekly payment. I think it's like 78 bucks or something like that. Sure, but doesn't that suck to look to... Here's the thing, you just told us you're so sad missing out on the free money while you just robbed your 401k and unplugged the growth. You know, it's part of the, and I didn't realize this, and I'm, you know, we just, we started this small group here at our house. We're hosting it. And, you know, if I had known a year ago that it said, don't borrow from your 401, you know, because it's, it's a, I don't want to say it's a lie, but

they say, you know, borrow from yourself and you pay yourself back interest and everything. But in reality, that money isn't there. No. It can't really grow. Exactly. Well, here's the thing, Jonathan, it's all, it's all shortcuts. And if it's a shortcut, you got to run far away, man, because it's going to end up with you being broke, regretting it.

So I have full faith in you. We love you, man. We're cheering you on on this debt-free journey. Welcome back to The Ramsey Show. I'm George Campbell, joined by Jade Warshaw. Hey, if you are already starting to think about the holiday season and shopping for the loved ones in your life, check out our $12 sale. That's a killer deal on some of our bestselling books like The Total Money Makeover, Baby Steps Millionaires, Own Your Past, Change Your Future, just 12 bucks each. And when you go to ramseysolutions.com slash store, you're going to see some fun new things too, including my brand new book, Breaking Free from Broke, which is now on presale. Our friend Rachel Cruz has an

awesome new kids book called I'm Glad for What I Have. There's the 2024 Ramsey Goal Planner featuring our very own Jade Warshaw in there. And so you can go check all of that out at ramsesolutions.com slash store. And while you're there, we've got the Ramsey Christmas Cash Giveaway. You can win up to five grand

and enter daily for more chances to win. So lots of fun things to do on that website, but you gotta go to make it happen. RamseySolutions.com slash store. Courtney joins us in Indianapolis. Courtney, welcome to the show. Hi, thank you so much for having me. Yeah. How can we help? So I am wondering what I should do with my apartment lease renewal when I could potentially be getting married next year. Ooh, potentially. This is a variable here. So we know it's happening. Are you engaged? No, not yet, but I'm not completely delusional. My boyfriend has put a deposit down on a ring that I'm aware of. And then he also asked for my opinion on when he should meet with my father to ask for his approval. Okay he's so sly. This is promising. I was about to say I was about

to be like Courtney you're thirsty but he's not exactly stealth mode here. So this is probably happening like by Christmas what do you think? Probably. But then the wedding could be who knows when a year from now two years from now? Hopefully sooner? Right. My boyfriend and I have discussed sometime next summer, maybe even in June. But my lease renewal is up within the next month, and I need to make a decision within the next two weeks.

And there is some variable between which or how long I want to resign my lease for. Does he, does your boy or your soon-to-be fiance, does he own a home or does he also have a lease? He owns his home. I see. So the plan obviously would be then to move into his home when you get married. Correct. I see. I see. What would, what would it look like if you tried to sign a half-year lease? So they would allow me to do a six-month lease, but it is $300 over my current amount. Each month? Okay. Yes, each month.

So they are hiking up my rates quite a bit. And I don't necessarily plan on moving per se. And it does seem like the six month would be the best option. But I would also probably have to live here for slightly longer than those six months. And who knows what the options and costs are going to be if I have to sign next year. And I do have a friend who said that I could live with her during the meantime if I needed to get out of my apartment before officially getting married, but there are just a lot of variables at play here. So if I'm you, I don't want to jump the gun,

right? But it sounds like you guys are having real conversations about when you will be married. So it doesn't feel like it would be out of bounds for you guys to sit down and go, okay, here's what we're really up against. If we get married, we're moving into your apartment or into your house and I've got this apartment. If I do this six month thing, it's going to cost me $300 more every month for six months. I really don't want to live with my friend. It sounds like you guys have to do some actual like schedule planning on this because if he's waiting do we know if he's waiting because he just wants to do a really romantic Christmas proposal is he waiting because he's still saving up money for the ring like I feel

like there's more I feel like there's more conversations to be had in order to really inform this decision and make the best decision okay that's fair is that fair i mean otherwise i would just say hey just talk to your apartment complex and see if you can do a month-to-month thing let them know that at least you're going to need six months but if it needs to be seven or eight will they be willing to do that tell them the situation i mean you could definitely start there but i'm the type like i want to know like i get it like engagements you do want there to be this element of surprise like i get it i've watched themark movies, but at the end of the day, it is real life. And it's like, no, there's real money on the line here. $300 a month. Yeah. That's 1800 bucks for six months,

Courtney. So what would it cost to break the lease? Let's say you did a 12 month and then randomly you had to dip out. What would that cost you? I'm guessing more. So yes. And it's not super clear within the lease agreement. It's very broad when it comes to it. They say it would cost two months of rent, but it's not my rent. It would be market rent at the time. And that means they can screw you is what it means. Right. I'm not doing that. No. So we're not doing that. I want to give your best shot and go, hey, if I do an eight month and cut early or six months and then go month to month. And I did this with my apartment. And if you just get to

know the people at the front, be real friendly with them to where they go, listen, you know, I just got engaged. It's very exciting. Here's what we're kind of planning for a wedding. Would you guys work with me and just give me the same rate if I went month to month? It's probably going to be just a month or two. I'll give you a 60 day notice. I'll even help you try to find a new tenant. All kinds of things. You can even get referral bonuses. Hey, what if I get another renter and you give me 500 bucks for every renter I get? There's all kinds of things you can work out with the apartment complex. But be firm and kind and real friendly. Thank you so much, Courtney. Good luck on the impending engagement. I'm excited for her. Courtney had to dip out on that one.

She dipped. She was so excited. She was like, I'm going to go right now. All right, let's get to JB in Memphis. What's going on, JB? Hey, so it's a pretty weird question. I've got about $15,000 saved up right now, and I've got about $10,000 left on my car payment. But my grandmother left me her house. She passed away not too long ago. So now I'm kind of stuck on the point, well, do I either want to renovate her home for me to move in after I graduate college, or do I want to go on and sell my vehicle? I'm paying off the car today. The renovations are, I mean, where are you living now?

In my parents' home. How long can you live there? I mean, there's not really a set time. I guess until I graduate college. Okay, but she left this house to you specifically? Yes, sir. 100%? Yes, sir. And you want to this house to you specifically? Yes, sir. 100%. Yes, sir.

And you want to keep it and live there? Yes, sir. Yes, sir. It's a four-bedroom. Okay. So my plan would be I'm going to pay off all my debt. Is it just the car loan? Yes, sir.

So that's gone tomorrow, and you still have five grand left, and that's going to start your fully funded emergency fund. So let's get three to six months of expenses. Then we can begin figuring out what's it going to cost to renovate grandma's house and how do I cash flow that and then step into that with a lot of peace and a bunch of cash in the bank.

Okay. Are you working already? Are you going to school? Yes, I'm going to school online and working full time. Good for you. What do you do full time? Around $50,000 a year. $15,000 a year? You said $50,000? That's $50,000. $50,000? Doing. $15,000 a year?

You said $50,000? $50,000. Awesome. Doing what? Yeah, what are you doing? Working for the city of Oxford, Mississippi. Fantastic. That's great.

And is that the long-term game plan? No, sir. I'm wanting to go to school to be an educator and hopefully pastor a local church. Okay. Wonderful. So we've got a lot of goals ahead of us, man. Yes, sir.

I like it. So is your goal ultimately, are you planning on fixing up this house and getting roommates that'll pay rent with you? Or what's the goal? Because four bedrooms is a lot. I've been dating a girl for the past four years, so hopefully proposing in the next year.

I've already bought a ring. Okay. It's just really getting down and taking the time with her parents. Love it. And then... You're like a fully grown adult at 18. I'm impressed, man. Look, I never...

Jade Warshaw never could. But I'm glad. Yeah, I love it. Grandma set you up. That's great. I'm happy for you, JB. Yeah. So I think we work on a game plan. Even if it means if you're going to move out of the house and rent for a little while, that's okay to get some footing under you and get some independence while you save up and renovate this house. Or if it's ready to live in and you renovate it as you move, but do it at the speed of cash, that's fine. But I would pay off my car first and have a fully funded emergency fund before I stepped into this home ownership journey.

Okay. All right. Thank you. It sounds amazing. have a fully funded emergency fund before I stepped into this home ownership journey. Okay. All right. Thank you. It sounds amazing. Hey, that's the best we've gotten today, Jade, is that it sounds amazing. That's what we aim for. We rarely hit it. So thank you, JB. We hit the mark on that one. Happy for you, man. That's a pretty cool thing. Cool legacy for grandma to leave. That's the kind of grandpa I want to be. I know, right? We didn't even ask what the house was worth. Who knows? A billion dollars grandpa I want to be. I know, right? We didn't even ask what the house was worth. Who knows? A billion dollars maybe? Could be. Who knows? If it's in Memphis or Oxford, could be a pretty penny over there. This is The Ramsey Show. Give us a call at 888-825-5225. We'll be right back. Hey, you guys. Health insurance costs are only moving one way, and that way isn't down. And if

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a medical event. 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 budgets. That's chministries.org slash budgets. Welcome back. This is The Ramsey Show. I'm George Camel, joined by Jade Warshaw. The number to call is 888-825-5225. Kayla joins us just up the road here in Nashville, Tennessee. Kayla, welcome to the show. Hi, yes. I just had a question. We are recently, we just got out of a Chapter 13 bankruptcy and are completely debt-free, but just kind of unsure where to go from here. When was the bankruptcy?

It was two years ago. We ended up selling our house and paid everything off. And then we have about $25,000 that came back to us after everything was paid off. Wow. Wow, that's intense. How are you feeling after all of that? Relief, but also, obviously, we got into that situation because we were not making great financial decisions. So I don't want to go back there. So just trying to, we haven't touched a dime, just kind of sitting where we're at and I'm sure kind of where to go from here. Can I ask a question? It's a little bit of a past question, but when you filed for bankruptcy, what sort of

debt was it? Was it medical things that you just felt like you couldn't avoid or was this, hey, we were just racking up credit card debt. We weren't paying attention to our money. Can you kind of walk us through what led to that? What sort of habits? Yeah, it was mostly just being honest, not paying attention to our money. We became parents very quickly and adopted eight children at pretty much all at one time. Say eight?

Oh, wow. Rocked our world a little bit. Eight children? So we needed a bigger car and just, you know. Pause, Kayla. Did you say you adopted eight children? Two people to ten people. Yes.

Holy moly. At the same time? Yes. She just sped past that like it was no thing. My goodness. Wow. Okay. So we just got, you know know life kind of you know got the best of us and just trying to figure out you know how to budget with this

and we're very confident in that now um not struggling whatsoever we have a nice income what is the income um we make about 240 combined. Combined. So you and your husband both work. Is it pretty split down the middle of what you both bring in or is one of you a major breadwinner? He would be the major. He's right about $200,000. And I have a business that I have taken a step back from. However, it's fully functioning. So I stay home with the children.

Okay. We have that. Okay. That's what I was getting at. I didn't know if one of you stay home with the children okay we have that okay that's what i was getting at i didn't know if one of you stayed home with the kids okay very cool so you've got this great income you've got 25 000 that you've got sitting there is that enough to call three months of income um no that's about two months at this point that's about two months okay and when i say income i mean um when we talk about three to six months of expenses for your savings, that's your basic budget. It's not all the bells and whistles. It's like, hey, this is just what we need to keep the clock ticking, right? Okay.

So you might call that 30? Closer to three then. Yeah, we're probably closer to three. Okay. Okay. So for the next few paychecks, we use that to bolster that emergency fund. Maybe you got eight kids. It may need to be 35 or 40. I may have six months. I would. Because one of those kids has a health emergency and boom, there's a bill.

So figure out what that number is. Start looking at, are you guys doing a monthly budget since bankruptcy? Yes, but no. I feel like we have, and this is kind of the scary part, is we don't have that bankruptcy payment any longer, which was very large. So I don't want to go back to using that. I obviously want to put it towards something. Okay. We're going to help you get on a budget. We're going to gift you a year of our every dollar budget with all the premium features. It's going to connect to your bank. It's going to show you a financial roadmap.

It's going to help you with paycheck planning to make sure all of your bills are behind the paychecks and not in front of them. So you'll get that. And then you can sign up for my budgeting webinar I'm doing this Friday, everydollar.com slash budgeting. And it's an hour long webinar where I show you how to set up your every dollar budget, how to create margin. That's your next step. We got to start paying attention to our money because what got us into that bankruptcy was not paying attention. Yes, correct. So that's the first step. The second step is make sure you have your four walls covered. So that's food, utility, shelter, transportation. You guys have that covered. Yes. We're not going back into debt ever again for anything, for any reason. Agreed? Do you both agree? Yes, we agree. Have you cut up all credit cards? We're renting right

now. That's where we're at. So we have no credit cards. We are renting. We would eventually like to purchase a home, obviously. So that's going to be your next step. After you have this emergency fund, we start to get dreaming again about what our new future looks like with a clean slate. We go, hey, we made mistakes. Been there, done that. Not doing it again.

We're going to buy a house the right way. And you know what that means? It's going to take a long time. It's probably going to take, you know, three, four, five years to get that down payment. Making 240, if you can live off 60, 70, 80, 90, you can start shoveling away money into a savings account and buy a house in no time.

Even if living off 100 with them, if they can take 140 a year, that's some big money. You're going to be in a really good spot. But that's where the budget's going to be so helpful because it's going to show you how much margin you should and could have if you follow the budget. Okay. And with no debt payments, you're going to get there in no time. So does that help you at all? Yes. I just need some direction. I just am so afraid of getting back into that place, and we've done a really good job of maintaining, so I would like to continue with that,

but in a more positive way. Well, I think you're, I mean, I think by calling in, I think you've made the right choice. And it sounds like you're open to doing what it takes to for sure not repeat the past and really get on a plan. Like George said, I love it. Have you guys been through Financial Peace University? We have not. So I'm very new listener. I'm very intrigued, but just got my husband on board. So we are ready to try all the things. Okay. Well, hang on the line. I'm very intrigued, but just got my husband on board, so we're ready to try all the things. Okay, well, hang on the line. I'm also going to gift you Financial Peace University. This is going to be a game changer, but you and your husband need to go through it together. This is not a Kayla goes through this on her own.

Go through this together as a family, use the every dollar budget, and call us back if you have any questions. I hope to see a beautiful redemption story out of this. I love that. Out of the ashes absolutely but i get it you know you're i would imagine i've never walked through bankruptcy but i could imagine the biggest fear would be repeating the past especially if you're not able to pinpoint exactly what set the dominoes in motion it's like all right what was it was it this health scare was it but in her case it was like we. It's like, all right, what was it? Was it this health scare? Was it, but in her case, it was like, we just didn't pay attention. Yeah. Which is a very classic scenario. All right. Let's go to Daniel in Omaha. Daniel, how can we help today? Hey guys, thanks for taking the call.

Yeah. What's going on? Yeah. So I have, I guess I tend to call myself a lurker. I can always listen to Dave Ramsey and never really actually practice it until recently. I had a recent life change a few months ago, finalized the divorce. We have a two-year-old daughter. So I guess kind of part of that process, I guess, while I'm now on baby step two, I've been thinking about kind of getting life insurance that way if something were to happen to me. Yes. Things are, you know, they're set up for her in the future and obviously yes I have some ownership shares in my business so I've got a trust already set up so I guess there's no is it

should I wait until I'm paid off all debt or life insurance something I should consider now uh Daniel I love that you're asking this question because by you calling in you're going to help a whole bunch of folks. George, I think a lot of times when we talk about insurances, people think it's like, oh, yeah, after I pay off my debt. Once I have a good financial position. Yeah, then I'll get my insurances in place. And it's absolutely not that. As soon as you find out about life insurance, as soon as you find out about these things, we want you putting them in place. Because the fact is you don't know what the future holds. And the whole purpose of something like life

insurance is to replace income for people who depend on it. And in this case, it would be your daughter. And even if you don't have kids, it's important to have life insurance because somebody and someone's got to cover the cost if you were to leave this earth. And so having life insurance makes sure that that's the case. So I certainly would get set up with life insurance. I'd call Xander today. Yeah. And Daniel, make sure you're getting term life insurance.

Don't fall for stuff you saw on social media about whole life. You want term life insurance 10 to 12 times your annual income. That's right. A 15 or 20-year term should do for you, and that will set her up for the future and give you peace of mind as well. Awesome. It's real cost effective as well. So don't let that spook you.

Oh yeah, it's not expensive. Whole life insurance is crazy expensive and a giant rip off because you're giving the insurance agent a lot of commissions up front. That's right. To cover this with a weak savings account attached to it. So term life is the way to go. And our friends at Zander, that's who I'm covered through. They've covered millions of our fans.

They'll take good care of you guys. You can reach out to them through ramseysolutions.com and click on our trusted pros there. And I use them for all kinds of insurance, auto, homeowners. They shop the top companies and they're independent. So you're not stuck with your bro from, you know, your college buddy who works for the big-name insurance company.

They'll find you great coverage at a great price, and it is worth it. I sleep better at night knowing Whitney will be just fine if something should happen to me. Sometimes, you know, I sleep with one eye open. Look, I know that's right. Xander got that stuff under lock and key, sleeping with one eye open. Well, I'm sorry you're going through this, Daniel, but you're taking the right next steps, man. This is The Ramsey Show. Welcome back to The Ramsey Show.

I'm George Campbell, joined by Jade Warshaw. Our scripture of the day, 2 Timothy 1.7. For God gave us a spirit, not of fear, but of power and love and self-control. Thomas Stanley said, millionaires are risk takers and they don't become millionaires until they're 40 or 50. It's a slower process than a lot of people think. Ain't that the truth? It's a tortoise versus the hare. Wealth is patience. All right, let's get to the phones. Michaela joins us up next in Little Rock. Michaela, what's going on? Hi there. Thanks for taking my call. I'm a teacher, and the way that our state works, we contribute 7% of each check, and then our employer contributes so much, and it goes into this massive state account. And then when we retire, there's a formula of yours contributed,

whether we were certified or not, basically that gives us that formula. I am just trying to figure out, because I'm only contributing 7%, where should I be putting that other 8%? Okay, so you're not allowed to contribute more than that? Correct. Okay, so you're not allowed to contribute more than that? Correct. Okay. It's not an account like, like if I die, I have beneficiaries, but it's not like, oh, it's just gaining great interest, not that kind of account. It's sort of like this weird pension situation where you don't really have control over it. It's not great investments, but it is what it is, and you're forced to do it. Yes, correct.

And then if my calculations are right, I'll end up with between 50% and 60% of my salary upon retirement. Okay. And obviously not great for a teacher's salary. Sure. So what are the other options is what you're asking to get the other 8% invested? Right. Should I contribute that, have my husband contribute additional to his?

Should I do my own? What's your household income? What's the best? Around 100,000 gross. Okay, so we know we need to be investing $15,000 a year total by the end of the year. And so one place you can go is a Roth IRA. It sounds like you're eligible for that.

Okay, and that would be 15% just for me, not for my husband as well. So one place you can go is a Roth IRA. It sounds like you're eligible for that. Okay. And that would be 15% just for me, not for my husband as well. That's what I wanted. I'm sorry. I'm following. I'm following now. I'm so sorry. It's the end of the day.

That's okay. That's what I wanted to get to. God bless our teachers. I want to make sure you understand it's 15% total, not just... Okay. So if you invest 15% of your salary, he invests 15% of his salary, it will amount to invest 15 of your salary he invests 15 of his salary it will amount to 15 of household salary yes yes long day teaching clearly totally get it does he have anything associated with his job a 401k of any type he um is contributing nine percent to a r Roth with a 6% employer match right now. Okay. And is it possible for him to get to...

Is it possible... Gosh, it's the end of the day for me. Can he make up the difference and it all go to his Roth 401k? I think that will put him above the limit for that. He can contribute to a 403b. What's his income? We're both right around 50. Okay.

And you're saying he has a Roth IRA that he contributes to? Or 401K? He has a Roth that he contributes to, but he also has the ability to contribute to a 403B. Is he a teacher as well? He is a pastor. Okay. Okay, I get it, I get it.

Okay. So, yes. here as well he is a pastor okay okay i get it i get it okay so yes so we want to make sure that the match doesn't count in the 15 equation that's icing on the cake so the easiest way to think through this we're continue i'm sorry i didn't interrupt there we're we're finishing up paying off debt and so we're trying to look ahead and so we're we're super close to be by the end of the year. Mikayla, this changes the whole donut here. We're talking about sprinkles. We need to pull it back. Pull it back. Come on, George. So let's pause and we're going to pay off the debt faster if we go down to 0% temporarily. Now, it sounds like you can't go down to 0% with your situation. I can't. Correct.

So you're stuck doing that, but he can stop contributing the 9% of 50K, which is going to free up some money to throw at the debt. He'll be back to it in no time. In fact, when he's back, I want him investing 15%. So the simple way to think through this, once you have no debt and a fully funded emergency fund of three to six months of expenses, and here's the strategy you need to rattle off to him. Match beats Roth beats

traditional. So if either of you have a match, that's where we want to start investing up to the match. Beyond that, let's go to all the Roth options that we can and max those out. If we're still not a 15%, then we can go to traditional accounts. And so that might be for him the 403B if he doesn't have a Roth option. Or can you contribute more to your school situation if necessary? Sounds like you won't get there. Mine is just what I'm doing. So I should do something either tack on to his or something separate. Well, once you both max out a Roth IRA for the year,

you're probably going to be right there. Okay. So I wouldn't worry too much about that. But that's the simplest way to approach it. Match beats Roth beats there. Okay. So I wouldn't worry too much about that. But that's the simplest way to approach it. Match beats Roth beats traditional. Okay, perfect. Absolutely. Good luck on the debt payoff and getting back to investing. It sounds like you're excited about it. God bless our teachers. I know, right? All right. I think we got one more in us, Jade. Let's do it. Joe was waiting in San Antonio. Joe, welcome to the show.

What's happening, guys? Thank you so much for taking my call. I love your show. You guys are incredible. Oh, thank you. We're honored to have you. How can we help today? I think this is a no-brainer, but I'm still going to ask because I'm old and semi-senile, and I don't want to make a mistake. Well, you know, you're self-aware enough that tells me you're still here with us. I just don't want to make a mistake at my age. I'm 69 years old. My wife and I are both retired.

We live off of Social Security. We have no debt at all. My house is worth probably $800,000. We have no credit cards, no car payments. We're debt-free, right? Right. Do you have any retirement? No, that's all we live off is Social Security. And how much is that every month?

That's like $3,500 a month. Okay, $3,500 a month, no nest egg. Got it. Well, there's a nest egg, but... Well, how much is it? I don't touch it. About $100,000. Okay.

Okay, and what's the question? Well, how much is it? I don't touch it. About $100,000. Okay. Okay. And what's the question? So what I want to do, I have the opportunity. I live on two acres. I have a big shop in the back that I'm not using all, and I was thinking of converting that into a, what do you call it? I can't think of it. A little apartment.

I can't think of the name right now. Anyway. So just adding on. Taking out of, oh, I'm sorry, what's that again? You're just adding on an extra room. Yeah, but it's not a part of my house. It's on my property, but it's on my shop at the back of the property. Okay.

Or next to it, one or the other. Approximately 600 to 1,000 square feet. I haven't really decided. Okay. But I want to know, since I don't want to touch that nest egg, should I take a first lien loan out on my mortgage? No way, man. Why would you do that?

Because I can get a write-off. Oh, my gosh. No, no, no. Joe, you know who says I'm going to do it for the write-off? Broke people who don't understand how taxes work. You're going to put your home at risk, go into debt after being completely out of debt at 70 years old for a write-off? You don't need it. How much is it going to cost? That's why I called.

How much is it going to cost? That's why I called to get my brain straight. What's the addition going to cost? What's that say? What's the addition going to cost? I'll get my brain straight. What's the addition going to cost? What's that say? What's the addition going to cost you? Roughly between $50,000 to $60,000. And what's it going to do for you? Yeah, what's the purpose?

Well, they'll bring in roughly an extra income, anywhere between $1,200 to $1,500 a month. How do you know someone's going to pay $1,500 a month for a 600-square-foot spot on a farm? Pretty proven. By who? It's going to happen. I'm not worried about that. Okay. Joe, but think about this. The ROI on this thing, let's say $1,200 a month, 12 months a year. Let's say that's all pure net profit. You never have a single expense, which is a lie. That's $14,000 a year.

So even then, it's going to take years to ROI on this $60,000 purchase. Uh-huh. And you don't need it because you've been saying you've been living off your Social Security just fine. And I think it's going to cost more than that to get this thing up and running. I do too. It may. It just may.

I mean, plumbing, electricity, HVAC. Yeah, exactly. I've already done all the figures, and it can get up there. I mean, if you had a way. I have such a big equity in my house. That's the only way I can probably recapture some of the equity. I'm not going to lose the house because I've already done the math, kind of.

$50,000 is $577 a month for 12 years. Here's the thing. I'm not really sure what you need the extra $1,200 a month for. Unless he was going to take that money and invest it. And that was... I think we're getting a little starry-eyed, Joe. I'd back up. I think the reason you called was because you knew deep down in your heart

this was probably a bad decision. And we were here to validate that. And now we're the bad guys for ruining Joe's dream. No, we're the good guys for keeping him in his right mind. That's the show.

Hey, that puts this hour of The Ramsey Show in the books. Until next time, spend wisely, save intentionally, and give generously.