The Ramsey Show - App - What Does “House Poor” Mean and Why Is It Bad? (Hour 1)

Episode Date: June 5, 2023

Dave Ramsey & George Kamel answer your questions and discuss:  Is Dave inconsistent about his views on debt in collections? "What does it mean to be 'house poor' and why is it bad?" from the blog: How Much House Can I Afford? "Should we pay off our car with home profits?" Opening up a savings account for a baby, "Should I lower my 401(k) to pay off the house?" Pausing the baby steps to cash flow a wedding. from the blog: When to Pause Your Debt Snowball Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Join a Personality-led FPU class. Click here! Want a plan for your money? Find out where to start: https://bit.ly/3cEP4n6 Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 Interested in advertising on The Ramsey Show? https://ter.li/s64ye3 Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

Live from the headquarters of Ramsey Solutions, broadcasting from the Pods Moving and Storage Studios, it's the Ramsey Show, where we help people build wealth, do work that they love, and create actual and amazing relationships. George Campbell, Ramsey personality, co-host of the very, very popular Smart Money Happy Hour here on the Ramsey Network. It's a podcast with me and Rachel. He is my co-host today.

We're taking your calls at 888-825-5225. That's 888-825-5225. That's 888-825-5225. Joyce is going to start off this hour with us in Chicago. Hi, Joyce. Welcome to the Ramsey Show. Thank you. Hi, Dave and George. Hey, what's up?

I'm so excited to be on your show and a little nervous, too. Oh, that's okay. We've never lost a patient. How can we help? Hey, I just wanted some clarification about the advice that you give debt and collections seems to contradict what you say about other debt, and I'm just curious as to why that is different. Okay. I think I know where you are, but let me make sure. You mean suggesting people settle it versus like if you have a student loan, I suggest you pay it? Absolutely.

Okay. I'm making sure I knew which type of advice that was in conflict you're asking. Okay. To start with, it might help to know that the full breadth of the advice would be if you have the money and the entire bill is legitimate and it's in collections, pay it is our advice. Okay. I don't suggest people settle debts except those that are broke. Now, if you have $100,000 in medical debts, let's say, and you're calling me to say, gosh, I think I'm bankrupt. I've got $10,000.

Well, you're not bankrupt. You need to settle each of these for 10 cents on the dollar. That way, you gave them everything you had, and you cleared the debt honorably. And that settlement is obviously voluntary on their part but the other thing that comes into play then is have they doubled the bill or tripled the bill with collections fees or a bunch of other things because sometimes you start out with a thousand dollar bill and 18 months later it's eight thousand dollars with these people and so i'm going to go back and settle down to the original bill for sure i'm not going to get extorted just because it went into collections.

But from a moral construct, if you give them what you have and they will accept that in settlement, then that's a fair deal. Okay. And the way I know I'm okay with my ethics on that is I reverse it. Because I don't hear adversary in your voice. So I'm just kind of teaching with you. If there's adversary, we'll go back to that in a minute. But I just hear a sweet lady asking a question. And so the other thing is if I reverse it.

Okay, I have a company that 20-plus years ago advertised on this radio show. Oddly enough, the name of the company was Integrity.com. Okay. I mean, they had the website for Integrity, right? And they decided that they weren't going to pay us $40,000. And they got in financial trouble. And I still have not gotten my $40,000, that integrity.com. I would imagine they're all gone, whoever that was.

They're long gone, right? So I'm not worried about it, but it's irony of ironies. I love the story because of the name. But if they called me today and said, listen, we're broke, but we're trying to go back and do right by these bills. And it's 20 years later. I could have added a lot of interest. I could have added a lot of legal fees.

I could have done a lot of stuff, right? But if they said, look, we will give you $4,000 to settle this bill if you will accept that, and I'm on the receiving end of this, I'm taking the $4, dollars because the probability of me getting anything out of these people ever while i'm breathing this side of heaven is zero exactly and so i'm happy to get not because not because necessarily in that case that they're of bad character although they might have been i don't remember that part of the story but but it's just irony i didn't get paid by integrity.com but the uh but but you know but but

but if if i think somebody's broke and they're trying to be honorable and will settle with me on what they owe me, I'll take it, A, because I'm probably not getting anything else, B, because I want to set them free. Okay. And if I want to swap that and say, gosh, I got $10,000 to my name. I got $100,000 in bills. This hospital's looking at me going, you're a bankruptcy looking for a place to happen, right? Then they're going to say, hey, you know, we've already gotten a lot of money out of the insurance company,

and we're going to let this little hillbilly go. We're going to let him settle this for pennies on the dollar. Then that is honorable, but you didn't have the money to pay the bill and just refused. With the student loan thing, I'm getting these calls i got 90 000 bucks in the bank i owe 80 000 and i'm waiting around to see if biden's going to forgive it and i signed up for the student loan see i think that's morally wrong i do too i agree completely do you have debt joyce i'm curious or is this just more hypothetical you know i listen to your show every day just all day and um i just have noticed these um just a little bit of a contradiction and i just was just you know just curious because i'm all

about if you buy something you pay off your debt yeah you're old school i'm old school like you the difference is what you're getting what you you were getting, and that's what I thought was happening. And thank you so much for your question, because it lets me tell millions of people where we really stand. So your question did that for me. Thank you. But the difference is I'm also a crusader on the behalf of the downtrodden, the person

who's hurt and hurting and beat up and broke and scared and terrorized. And these collectors are calling them every day 10 times a day at work and two of them got fired last week because the collector called them so many times the boss didn't want to work in there anymore this kind of stuff we work with these people all the time so my love for the collection world is really really low low i kind of figured that yeah because i figured that out but that doesn't mean that doesn't mean you shouldn't pay your bill even if they're jerks absolutely if you've got yeah if you've got the money but if it's going to take you 152 years to pay your bill versus settle it and they'll settle it and you've got them a little bit of money and you're willing to give

them that little bit of money i'll help you beat the crap out of them because they're jerks i love it and the lenders have they already lost their money they've sold it to the collectors the collectors are trying to collect to make profit they bought it for cents on the dollar so it's a different scenario that's a valid point that's a really good point to bring up but it's still morally her her her bugaboo she's a moral person she and i agree with her yeah is if you signed up for that credit card debt, you ought to pay it. Pay it. Right? But I don't have the money.

A lot of the times it's medical debt, which I have more empathy for because no one goes to the hospital going, I'd love to take on $50,000 worth of debt. Yeah, but a credit card, you're right about the credit card. The medical sells for $0.10 or $0.15 on the dollar usually. Medical debt, I mean, credit card debt, you can buy it for a nickel on the dollar if it's 36 months old. Wow.

And so, you know, in other words, $5 will buy $100 worth. $50 will buy $1,000 worth of credit card debt. And these guys buy these accounts in mass for a nickel on the dollar and then go try to collect the whole thing, which, again, that doesn't relieve you of the fact you morally owe the debt, but when you're negotiating with them, that's handy to know. Yeah, they're still making profit one way or another. This is The Ramsey Show. Thanks for joining us, America.

Open phones at 888-825-5225. If you were joining us for our last segment, our last caller, George and I were talking about Joyce off-air, how much we appreciated her call. That was such a cool call. It had a lot of class. A, it was different. B, she was not mean or angry or trolling.

She just really loves what we do and was worried about us being inconsistent because she wants to be a fan. And we love being consistent, if nothing else. I mean, man, I love the opportunity to to clarify something then if you don't agree with me at least it's for the right reason that's true if you want to hate me do it for the right reason not for some reason you read on the internet because everything on the internet is true abraham lincoln said that one of my favorite quotes from him on twitter that's my i love it yeah it comes up quite often here we go today's question is sponsored by Neighborly, your hub for home services. Spring is here and it's time to handle those projects

that have been on pause. Neighborly has top quality home service providers like Mr. Handyman, Glass Doctor, Precision Garage Door Service, and Shelf Genie. I think I need a Shelf Genie, George. So find the local help you need at Neighborly.com today. Today's question comes from Drew in Austin. He writes, I hear you guys on the show talk about being, quote, house poor and not spending more than 25% of your take-home pay on your mortgage payment. Can you explain more of what house poor means and what's bad about it? In today's real estate market, that is tough to do with high home prices, higher interest rates, etc. What is the harm of paying 30 to 35% if that's what it takes to get into a house these days, especially since it is only going to appreciate in value? Well, this is interesting. It's a good question. Number one,

the idea of the house appreciating value doesn't change the numbers of you have this much income and this much of your world is being taken up by that house payment. And so that's what being house poor comes down to. You don't have enough money left over to do all the other things like fund college, fund retirement, go on vacation, upgrade the car, cover the emergencies. And so being house poor just means that you have too much of your world wrapped up in that mortgage payment. and that's too many Americans today. There's a reason that people have a car payment if they have a 35% of their income going to house payment.

They don't have room in their budget to save up and pay for a car, so they go into debt. So house poor means I borrowed so much on my house that I end up borrowing on other things. Oh, and my kids in the future, they'll have student loans because I didn't save for their school. Oh, and anything I get ready to do that I don't have room, as George said, economists call the room in your budget, the margin in your budget, your disposable income, the income you have for saving and for investing and for enjoying.

And if after your debt payments, you don't have any disposable income, any margin left, any wiggle room left in your budget, you're going to end up in our society going into debt. And so, Drew, let me tell you one other thing. I appreciate your call or your email. In today's real estate market, it's tough to do with high home prices, higher interest rates. That is a phrase I have heard since I went on the air in 1992.

Every year someone says, but Dave, I live in California and we don't use math here. Dave, I live in New York and math doesn't count here because it's so expensive that we don't have to follow mathematical facts. We can just borrow and say, oh, it's expensive to live here. Oh, interest rates are high, and I want a house. But the downstream result of that is that you're going to find yourself lacking in investments and lacking in kids' college funds, as George said, and lacking in money for emergencies. So everything that happens in your life is a potential new debt because you went so far in debt

in the name of getting a house because you rationalized and said, well, the world has never been like this. Well, well, the world has never been like this. Well, honey, the world has always been like this. I'm old and it's always been like this. House prices. When my parents bought their first home in 1962, $12,250. You can't buy a used car for that much these days. Three and a quarter percent interest rate.

And you know what? They got a 30. My grandfather had a fit. You're going to be in debt for 30. Have you lost your 30-year mind? Old people back then thought you were sinning if you went that far in debt well you're buying a coffin at that point yeah 30 years a long time yeah you're gonna be in debt your whole life what's wrong with you people that was the reaction of the generation before my parents right yeah but

they sign up for 30 years at 12 000 and man i mean my first apartment rent was 235 a month wow you can't even what you'd have to get nine roommates to do that you can't cross the threshold for that that's unbelievable they won't even let you go look at an apartment yeah you know but that but it didn't matter in those days my pay was different and guess what? The overall cost of goods was different. Gasoline was $1.26, okay, when that rent was there. So it's all relative in ratios. And so not picking on you and giving you the old boomer line here, you just don't understand, young'un, but you just don't understand, young'un.

It's always been this way. It's always been high yeah and you always have to make a decision to say no so later you can say yes live like no one else so that later you can live and give like no one else haley haley is with us rather in fort wayne indiana hi haley how are you i'm great how are you better than i deserve what's up i was just wondering if um we should pay off our car with the profit from our home sale why wouldn't you um because we're we don't have anywhere like we're going to be living with his mom um and we're basically going to be saving for a while.

There's no end date to living with her. Oh, there's got to be an end date. She wants there to be an end date. How long have you been married? I do. Eight years. So what is the profits from the home sale? It should be from $50,000 to $58,000 maybe.

Okay. And why did you sell your house? Basically because we can't afford it. Okay. And how much is your car debt? It's around $16,000. And what's your household income? He makes around $58,000 a year.

Okay. And you have three kids? Two kids. Two kids two kids okay do you work outside the home hayley no i do not okay all right so if you were to pay off your car uh that that would leave you forty thousand dollars forty two thousand dollars to be precise correct okay and you if you went and rented a house why do you have to live with your mother-in-law? What'd you do wrong? Basically, he just wants to live mortgage-free.

I don't care what he wants. I'm asking what you guys did wrong. I mean, you're like grown-up adults with a $60,000 job and two kids, and you have no debt and $42,000 in the bank. You should not have to live with your mother-in-law. Well, it'd be really hard to buy a house, basically. I just said rent. I said go rent.

That's option C. Yeah, he hasn't thought about that at all. I mean, it sounds like a waste of money, basically. I don't know. So is a divorce. No. I ain't living with my mother-in-law, Haley. So is a divorce. No, there's no... I ain't living with my mother-in-law, Haley. With no ending.

Well, this is our fourth time, so yeah. Your fourth time living with her? Yeah. Why has this become the hammock for your life? Why is this a pattern? I don't know. The thing is, his mom has said that she would give us two acres. Oh, that's sweet.

I'm not living with my mother-in-law. Two acres is not enough room. That's what he thinks on, of like somehow being able to build like a barn dominium. But now we're at the point where he's like, well, maybe we can afford like an apartment with a garage on it, which I've been trying to be open to, but having two

young kids, I'm like, eh, sounds like kind of small. I think your husband needs to choose reality. And the reality is we can't afford the dream barn dominium. We have to rent for a while while we keep saving. Listen, mom's not the answer to your future prosperity. You and your husband developing a game plan is the answer to your future prosperity. Every time we run home to her for future prosperity, your life gets worse, not better. Okay. Did I miss something? No, no. Please go rent something inexpensively.

Take five jobs. You pick up a side job that you can do from home while the kids are there. You guys get to work, make some more money, pile up some money to add to the 42 and go get you a nice little house that you can afford. Quit running home to mama. You're too old. That's what I would do. This is The ramsey show george camel ramsey personality host of the george camel youtube channel which has more than its

share of snark we have too much fun on there one of of Georgia's most endearing qualities is incredible level of snark. We all have our gifts, Dave. That's it. What's yours? You're functioning in yours. I'm, um... At least what you've been told, your gifts are. I don't know, that was self-proclaimed.

Humility. Yeah, that's it. Yeah, that's it. No, not really. Yeah, we'll just move right along, George. It's good. Open phones at 888-825-5225. Check out George's YouTube channel, though.

Alyssa is with us in South Bend, Indiana. Hi, Alyssa. What's up? Hi. I was wondering what type of savings account I should open for a new baby. When's your first baby due? She actually was just born in March. Well, congratulations.

What'd you have? Little girl, you said, right? Yep. Awesome. That's very cool. Cool. So when you talk about savings, are we thinking college? I'm not sure completely.

I don't know if we'll use it for education because we looked at an Indiana 5-9 plan since we're here in Indiana. But I'm not sure if it's going to be for college. It's kind of something for when she's older. She was getting some money when she was born and for baptism, and we don't really want to spend it for her. So we have about $500, and we're still on baby step two. But by the time she's like five years old, we'll probably be contributing more aggressively towards it.

Okay, we had two accounts for our kids. One was their little miscellaneous little savings account, which is what you're talking about. And then two, we had a college plan. The college plan was, and today if I had done it, it would be a 529 and it wouldn't be with Indiana, you wouldn't do prepaid ed. Instead, I would just do a 529 savings in mutual funds

and get you a smart investor pro at ramsey solutions.com to help you do that don't do that with the money we're talking about right now the money we're talking about right now is you just open up a savings account and actually the baby can't have a savings account until they're 21 you have to be 18 to do contract law in any state in the union and so when a kid has an account at a bank, it's actually in their parents name as in the kid's name with a parent as a custodian or someone as the custodian. So you're the custodian of the account. So you just run down there, open a little savings account. If you want to do high yield, that's fine.

It's not the money. The amount of money this account makes is not important. important and then what we used that account for was it started as a place that if they got absurd amounts of money that a four-year-old doesn't need we throw it in that account like if somebody gave him 50 bucks or something you know that four-year-old doesn't know what the 50 bucks so we're going to throw that into a little savings account okay five dollars you can go get you some candy or whatever but 50 bucks is crazy so 500 bucks is crazy right they can't because they can't make the distinction at that age of the value judgment so we're just piling that money up and so by the time they got up with miscellaneous over gifting at birthdays or whatever that kind of stuff

small amounts usually less than a thousand dollars but too much to give them for candy money it had built up to where they had sometimes a couple thousand dollars in there okay a little bit at a time and then when they we started training them on the financial peace junior system where we had three envelopes for your daily weekly chores and you got paid commission uh one of the envelopes was for saving and what you were saving for at our house was for your first car i'm taking care of your college with my savings plan for your college over here on the other side but you're saving for your first car and our deal was that we told them we would match it and so save like crazy because you got 401 dave going here

okay and so each of the kids saved up money and then whatever they saved up i matched that sharon and i matched that and bought them their first car and so like denise our oldest was the first one out and they always get the worst deal because it takes them a little while to break the ground and um i think she saved up like five thousand bucks or four thousand bucks we got a little eight thousand dollar nice mustang was nicknamed waldo because when she parked it and forgot where it was we always said where's waldo right in the mall parking lot right and so um you got to give a car a name when you're a teenager yes and the worse the car is the better the nickname has to be exactly and then uh rachel ramsey rachel cruz she's now known as uh saved up a little more than that and uh was looking at a really bad idea of a car we went and drove it and

she hated it thank god and uh but she had it on her wall for eight months and then we drove it and it's like it's horrible it was an x terra oh yeah horrible car did survivor make those possible i don't know real popular yeah i mean she ended up getting a used beamer which is a lot better car for the same money. And, you know, it was like a $10,000 Beamer. It was not super expensive. And then the little brother, he's kind of watching all this. So I'll go ahead and tell the whole story, Alyssa, so you can just all the way down the siblings, right? If you're going to tell them you're going to match, recommendation, parents, put a limit on it.

Ooh. Because the little guy might save up 30 grand you know business minded and uh then you got a 60 grand car with a 16 year old i don't think so so he did he saved up a ton of money and i said honey no 16 year old's driving a car that expensive in our house because you're going to tear the freaking thing up because you're 16 and you're an idiot so you're not going you're not driving a car that expensive so we got to get you a different car but i'm still going to match it and you can do something else with the money. And he's a ministry-minded kid.

He gave it to an orphanage in Columbia. What a guy. And so you have a huge gift at 16 years old. Huge gift. That's incredible. Yeah. And got him a nice little Jeep. And he's still got the Jeep to this day.

He's had several cars since then. But I bought the Jeep back from him later because I wanted it. Now it's sentimental. Then I gave it to him. It's probably worth $100 now, but I gave it back to him as a graduation gift. Yeah. So he's got it in the garage right now.

So that thing's still around. But that's the whole story on it. The point being that you kind of still need a goal for it. I don't ever like a savings account to have no goal. So you've got an emergency fund. You've got a car fund. You've got a college fund. You've got a whatever fund, and your kid could be saving for college, that's okay, but this is not just a general account, and then I decide I want to buy like $8,000 of Skittles,

because stupid people will do that sometimes, and you can't just allow them to do that. This is a parenting tool, it's not an actual financial transaction. Well, a lot of people, Dave, they're going, well, I don't know if my kid's going to go to college, so I'm just going to create an investment account, and that way they can use it on whatever they want. So that's kind of a new way of thinking for a lot of people. But with the new SECURE Act 2.0,

we can actually roll over those 529 plan college funds into a Roth IRA in case they don't use it. If you don't use it at all. But the other thing is you can use it for tech school and you can use it for other types of education other than four years of university, right? You can use it for a lot of stuff. And here's an idea. After high school, if you quit learning, if you never learn anything else after high school,

you're what's known as dumb. That's a problem. So you need to keep learning. Some type of further education. Don't be a dimwit. Keep learning. I don't care where you keep learning or how you keep learning. I'm okay with certain personalities not getting a four-year degree.

I'm not a hottie-tottie, one of those people, but a hoity-toity or whatever you call it. But anyway, I'm not that. But I'm fine with a welder making 120 000 and a master's degree in sociology making 38 000 so i'm choosing welder okay i'm fine with that um so but but that's not a bad choice is my point but the but this idea that i'm never going to learn anything else i'm never going to sit i just taught a week-long leadership conference with a whole bunch of the best minds in the world called Entree Leadership Summit. We just finished

last week. That's why I went on the air last week. And people paid a lot of money to be in there that make a lot of money and that are big business leaders that were there to learn from other people. Learn and read, learn and read, learn and read, grow, invest in yourself. So. That's important. Very important. Very important. Lots of stuff going on in this call. But yeah, you're right. But it's more about the principles like you mentioned dave but it is a baby in a bathwater thing to say i'm never you know higher education has lost its mind the student loan crisis is out of control the prices are ridiculous and some of the degrees offered are absolutely freaking useless so i'm going to abandon the whole idea of education well

that's dumb don't be dumb about education whole idea of education. Well, that's dumb. Don't be dumb about education. Everything I just said was true, but that's not a reason to abandon the whole idea of being smarter. Of course you want to be smarter. So, yeah, 529s are just fine. And you can change the name, too. Go to another kid.

Yeah. Someone's got to go to college. Go to another sibling. One of them's going to have to take care of the rest of you, sir. Oh, my God. kid yeah you can move someone's got to go to another sibling one of them's gonna take care of the rest of you so um oh my but the principles are good raise the principles give save spend flex those muscles and they'll be okay they'll be all right this is the ramsey show George Campbell Ramsey personality is my co-host. So nine months ago, we told you that the real estate market was going to slow down. It was not going to crash. The prices were going to go up, but not as much as they had been.

And that there was going to continue to be a shortage of housing versus the number of buyers out there looking. And it turns out nine months ago, we were right. Feels good. We were right. Not to say I told you so, but. Just not to say I told you so, but I told you so. There you go. So, hey, the job market and the economy, everything's kind of in a funk.

The real estate market has slowed down. The interest rates have gone up. It feels like it's in a big funk. But the weird thing is it's not. Houses are still selling. They're taking about twice as long as they used to, but they were selling in 30 minutes, and now they're selling in about 60 days. And there's more houses on the market because the market has slowed down,

but there was nothing on the market before. Some price ranges in some areas, there's a complete shortage. There's nothing for sale in a certain price range in a certain area. So if you want someone to show you the best neighborhood schools, someone to walk you through the best places to eat, someone to put you on the right foot when it's talking about getting a house, you need to get a real top-notch, high-octane, high-protein real estate agent. Not just any agent that got his license three weeks ago.

I'm talking about somebody that sells hundreds of houses, knows what they're doing, and if you want an agent that'll do more than just find you a home, connect with a Ramsey Trusted real estate agent. They're local experts who we have vetted to be some of the top salespeople in their area. They're that because they get houses sold and they help you find a house if you're a buyer. We can connect you with a Ramsey-trusted agent all over the country. There's thousands of them, and we spend a lot of money and a lot of time vetting them and making sure they're the right kind of people. Go to ramseysolutions.com slash localagents. I'm proud of these folks.

They do a good job for you listeners. That's ramseysolutions.com slash localagents. Works that way. Bill's with us in Cincinnati.com slash localagents. Works that way. Bill's with us in Cincinnati. Hey, Bill, what's up? Hey, Dave. Hey, George. I want to thank you for taking my call.

The question I have for you is debt-free except for mortgage payment, a new mortgage that we took out back in October. Currently, I'm maxing out my 401k contributions and wondering if I should either cut those down or maybe pause them to try to get the mortgage payment down. What's your household income? About $150,000, $175,000 and add another layer. I've got some after-tax investments and savings that amount to about probably about $240,000. The mortgage started at $300,000 back in October. I've been paying it off down to about $260,000 as of this month. So if you sold off your non-retirement assets, you could clear the house?

I would be pretty close. I'd probably be about $10,000 away. I've got about $240,000 in what we'll call liquid funds, and I've got about, I think, $260,000 left on the mortgage as of June. Wow. Why would you not do that? Well, when I talk to other folks, they say about the investment side, you know, basically based on returns and things of that nature,

that you're taking a risk on the investment side of losing money. Yeah, those are broke people. They have mortgages. Yeah. No, that's true, yeah. Yeah, we studied 10, 000 millionaires the number of them that told us they became a millionaire by uh by investing with money that they borrowed on their house was uh very dangerously close to zero like none of them well and i've actually thought

about that too about liquidating that account but you know as i said other folks have told me you know be careful about the returns and things of that nature so uh that's why i didn't know if i should uh you know as i said i'm topping out the 401k didn't know if i should you know, as I said, other folks have told me, you know, be careful about the returns and things of that nature. So that's why I didn't know if I should, you know, as I said, I'm topping out the 401k. I didn't know if I should, you know, maybe lower that or it sounds like the best plan would be to do the... Well, you know, we tell folks baby step four first, right? Yes. So baby step four, five, six, simultaneous, 15% of your income into retirement, fund some college, and whatever's left, we can start paying down the house. So are you doing more than 15% right now? Yeah, I'm maxing it out.

So I'm actually putting in 15%, but at the end, it's basically the max that I can contribute for the year. If you're putting 15% in, you're putting the correct amount in to retirement. I would not stop that to pay off the house faster. I would consider liquidating non-retirement assets to pay off a mortgage. Here's what's going to happen, Bill. When you get this house paid off, all those dumb people that are telling you that you're not going to hate it.

And if you hate it, go get you a new mortgage. You're not going to hate it. You're going to feel differently than you've ever felt in your entire life. How old are you? Just turned 52. Way to go. And you're making really good money, and you're 100% debt-free, but your house, you've really done a good job.

Seriously, if you followed our advice, what's your worst-case scenario? You hate it and you go get another one. Yeah, you hate it and you go get another one. Yeah. And I'm telling you, we studied 10,167 millionaires. We asked them what they did to build wealth. Eighty-nine percent of them becameaires, not because of an inheritance. So that means they systemically, systematically somehow built wealth. None of them told us that they did it with a

whole life policy. None of them told us that, that none, not one told us that they borrowed money on their house, invested that money, and that caused them to be wealthy, which effectively is what you're doing. I mean, honestly, tactically, you didn't go borrow this money. You borrowed the money to buy the house instead of cashing this stuff in. But balance sheet-wise, you understand it's the same mathematical effect as if you borrowed on your house to do those investments. No millionaires do that. None.

Now, broke people do it all the time and people with theory that don't actually build wealth do all kinds of crap they tell me they do they tell me they buy and sell stocks they tell me they got rich in crypto they tell me there's all these people that tell me all these things but they're a lot like fishing and golf stories 98 of which we all know that do either one or lies makes for a good story though truthfully making 175 with no payments in the world, you could invest another $200 in a few years if you really want to. In the period of time you could have paid off the house,

you can invest that much more. If you say, I'm going to cash flow and pay off $240, then your cash flow without a house payment would put the $240 back in approximately the same period of time. I mean, almost the same. Maybe a little less because you'd be earning on it as you went so um i personally have lived debt free for a very very very long time and as my old pastor used to say a man with an experience is not at the mercy of a man with an opinion jason is with us in Sioux Falls. Hi, Jason. Welcome to the Ramsey Show.

Hey, George. How are you guys? Better than we deserve, man. What's up? Hey, so I need your advice. I'm wondering, do I pause the baby steps to cash flow a wedding? Absolutely. Yes, sir.

Okay. What's the wedding going to cost? Our budget is $12,000. That sounds reasonable. Trying to keep it a little bit moderate. For sure. That's very modest. Good job.

Good job. Sounds like you're marrying someone with common sense. Yes. Yes, for sure. More than myself. Yeah. And then I'm also trying to switch careers. So what is your income?

$70,000 a year. $70,000? What's hers? Right now about $36,000. Okay. So between you, it's $106,000. How fast are you two going to save up $12,000? Should be saved up in September.

Yeah. Awesome. So it's not really going to delay the baby steps all that much. No, but then on the other side of the wedding, we're going to tackle her debt and I'm trying to figure out when, when to, uh, make this career switch that I'm thinking about. Cool. When's the wedding? Um, October 13th. Awesomeness. Good for you, man. This is great. And you have no debt, but she does? Correct.

I just finished Baby Step 2. Way to go. Very good. Very good. Yeah, I'm cash flowing the wedding and then piling up cash as high as I can pile it up. And when we come home from the honeymoon, we'll combine our finances and really get after hers real fast and hard. And then we can look at that career change. You've got a lot going on right now.

Yeah. Yeah. Do you need to do that before the wedding? The career switch? Yeah. I don't need to, no. Good. Let's wait until spring.

Okay. This is a time of great joy, and changing jobs is not always a great joy. Right. She, as we've talked about it, she has peace about it. I have peace about it. So I think we'll move forward eventually. Yeah, I want you to move forward. I was just questioning when.

Sometimes when we try to do six of the good things at once, one of them ends up messing up the other ones. Does that make sense? Yes, sir. That's what I'm thinking. But you do whatever you want. I'm okay. Hey, cash flow your wedding, man.

You're doing it. I'm proud of you. Very cool. Man, there's hope, George. There's hope. I thought you had to spend $100,000 on a wedding. Turns out people are just dumb. Yeah, the 12,000 people aren't dumb.

The $100,000 people aren't dumb. Yeah. Way to go. Unless you got a couple million anyway. There we go. This is The Ramsey Show. Hey, it's George Camel. If you like what you heard in this episode This is The Ramsey Show.