The Ramsey Show - App - What if the Value of the US Dollar Collapses? (Hour 2)

Episode Date: March 27, 2023

Ken Coleman & George Kamel answer your questions and discuss: What happens if the US loses its world reserve currency status? Picking up a second job, "Should I cut back on overtime so I can be home more with my family?" Focusing on paying off the mortgage, from the blog: How to Pay Off Your Mortgage Early, "Should I take out a life insurance policy for my mom?" Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Want a plan for your money? Take our FREE 3 minute assessment: 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

Live from the headquarters of Ramsey Solutions, broadcasting from the POTS, moving in storage studio, this is The Ramsey Show. It's where we help you win in your life, specifically your money, your work, and your relationships. All of those are tied together. We want you having true peace so you can live the life that you were meant to live. I'm Ken Coleman. I'm joined by my colleague,

George Camel, this hour. Both of us are Ramsey personalities, and we're here to take you through your calls. 888-825-5225. 888-825-5225. George is our money expert. I'll help you out on any work-related issues that may be holding you back. Your income is your greatest wealth-building tool. I want to help you get that bigger shovel to get out of debt and get through the baby steps faster, so we'll take those calls as well. But first, George, the internets are aflame. Wow.

Let me say that differently. YouTube, all the social media, everybody's freaking out about the latest round of negative news. I'm not freaked out. I know you aren't, but we'll tell people why. Okay. So the source here, we want to just give a brief amount of perspective because the news exists to freak us out, scare us. They want pearl clutching, hand wringing. It makes for good ratings, George, and then they can sell those ads for a little bit more money.

So the latest is freaking people out about our financial future, specifically the dollar. All right, so you've got Putin, Vladimir Putin, Mr. Russia over there, and you've got Xi Jinping, who is the Chinese premier, and now they're hanging out. A three-day summit. They're in cahoots, George. I don't like it. I don't like it either.

And so you got Putin and Xi Jinping hanging out, and they're talking about an alliance to threaten the U.S. dollar. And you want the direct quote from Putin on this? Anytime we can hear from Putin, I like to hear from him. I'm tempted to try my Russian accent, but I think I will offend all people groups in doing so. Well, if you die mysteriously this evening, we will know why. Okay, I so badly want to do it. I'm so nervous.

Just do it. It's an entertainment show. I'm in favor of using the Chinese yuan for settlements between Russia and the countries of Asia, Africa, and Latin America. What are you? He's watched too many James Bond movies, but I will applaud for that. That's pretty good. So there's the quote. He's saying basically they want to switch from the dominant dollar

and move to the Chinese Yuan, which could hurt America, obviously. So you've got two schools of thought when you see news like this, right? You can go out on the Internet and you can see a whole line of articles and opinions saying, this is really scary. They're going to collude. They're going to knock the dollar out and they're going to take all of our savings. Is this going to be an absolute disaster? And then on the other side, you got just as many experts and economists and people going, you know what? If that were to happen, it would take a very, very long time. China can't do it.

They won't do it because they own most of our debt, which that part is true. So the point we're making here is we're not taking a position on one way or the other, and we're certainly not going to predict doomsday. Okay? What we are going to say is you can control certain things. And you not having debt, let's start there, George, is a good thing. Oh, absolutely. So let's talk about the consequences. If this ever were to happen, which by the way, we've got an MSN piece here saying plans by Russia and China to challenge the dollar on the world stage are going nowhere. Experts say Russia's fragile economy and China's capital controls make both of their currencies less appealing.

If that gives you any peace. Now, let's talk about some of the consequences if the U.S. were to lose its world reserve currency status. So firstly, the value of the dollar would likely decrease, which leads to higher inflation. Nobody wants that. And even higher interest rates. Now, here's the interesting part. If you get out of debt and you no longer need to borrow money, interest rates don't affect you as much, do they? So that's why you're saying get out of debt. And I do want to point out though, George, because this is real, if the dollar were to be devalued

because it was no longer the reserve currency, your dollars would become pennies. Now that is a real, now again, whether or not this happens or not, but it's not just the interest rates or anything else. It's the value of your money would decrease. It's now $38 to get a gallon of milk. That's a scary scenario. That's exactly – that's real terms right there, where everything – well, you think inflation is high now.

Okay, so this is a tenuous idea. What could happen could really freak you out. Oh, absolutely. So again, back to the way we teach in our lifestyle, right? So if you've learned to control your expenses, you know, but this is by the way, George, you got to be careful here. I got to bring this up. This is the kind of stuff that doomsday preppers, they really jump on. They're like, you got to have 400 cans of green beans you got to have and you got to invest go invest in silver and gold all day long but here's the

problem with that advice i'm glad you brought that up the silver and gold are tied to the dollar so you don't it's not like you just skip the whole well if the dollar crashes i got a bunch of gold in their hills you know that doesn't work it's tied to the dollar and so um this is the type of thing where there's just there's only so much you can control and you not having any debt you not relying on the federal government to bail you out it's a good position to take oh absolutely and uh the the washington post article goes on to say, America's politicians have gotten used to spending seemingly without any concerns about deficits. And that is another piece of this puzzle, is America's got to get on the debt snowball. They really do. Smallest and largest, let's go. both sides of the aisle here. I want to be an equal opportunity offender. What can the average person do about the potential devalue of the dollar? I don't mean to be cliche, but it's one

thing. You only take care of your house. No, no, you vote. You vote men and women in there who will go, you know what? I'm going to run on eliminating the national debt. I mean, forget the rest of politics. Has anyone ever even attempted to run on that? No one's attempted to. Just imagine for's just imagine for a second if the American people, a huge swath of the American people said, all right, they're going to run on one issue alone. Forget about all the other issues that are important to you. Boy, I just offended a bunch of people. I just said, what if? What if we had a Congress that said, we're up there to actually kill the debt.

We're going to pay the debt down. And America is going to be debt-free. For some of you who think this is a preposterous idea, many states in this country have a constitutional amendment where they must balance their budget. So it is doable. There are state governments in the United States right now, by law, they must balance their budget, George, which means they don't have debt. They got to balance it. It can be done. I like this plan a lot, Ken. And if you're running, you've got my vote. I'm not, but I will tell you, there's one guy I know that if we stuck him in a

room full of people for 30 days, I promise you Dave could get a budget together. Dave Ramsey could put a budget together that would balance the budget. I'm here for that. I think America's cheering you on right now. No, no. I mean, he's not running. But what if we took Dave up there? We made everybody get in the room. They couldn't leave until they agreed to the budget he came up with. I would turn on C-SPAN to watch that.

Could you see Dave going to D.C., James, with this quickie budget for him? All right, America, we're going to do the quickie budget here. And then we're going to work through this. In 90 days, we're using every dollar. We're going to get the federal budget balance i don't that's an insane asylum for dave to have to be in that room with those people for 30 days i don't know if he'd survive yeah he would because no one else could talk he'd love it he would just tell him how it's gonna be give dave the mic only his mic stays on he's got scissors he's got the chain he's got everything it's all his props

here's what we're doing. We're not leaving until we balance the budget so we can pay off the federal debt. It's the world's greatest debt snowball. I love it. Well, hey, I'm sleeping easy at night. I'm not freaked out about this. You shouldn't be either. Focus on what you can control, which is your life, your money, your house.

It's that simple. That's a good word. He's George Camel. I'm Ken Coleman. This is The Ramsey Show. Welcome back, America. You've joined the conversation about your life, your money, your work, and your relationships. This is The Ramsey Show.

I'm Ken Coleman. I'm joined by my colleague, George Camel Campbell today, and we are here for you. 888-825-5225. 888-825-5225. I do want to mention that the weather's getting warmer, spring is in the air, and we love when people come to the studios. And we've got a great group of people out in the lobby today of Ramsey Solutions watching the show, looking at us like we're zoo animals. We had some students on spring break, George. It's always fun.

Come see us. If you're in the Nashville area, we'd love to see you. It's a good time. All right. Let's go to Baltimore, Maryland. Chi Chi is there. How can we help? I know it's Chai Chai in my heart.

Is it? What? Chi Chi? Is it Chai Chai? Yes. It's Chi Chiichi i apologize for george he uh he's not hooked on phonics let's just put it that way chichi i love the name how can we help okay so i am very thankful to even be getting any of your time. I really appreciate it. Wow, you're awesome. My current situation is that I just basically got out of homelessness. I'm living with my parents now, and I go to school part-time,

and I work full-time within the field I'm trying to graduate from. I have about $5,000 in consumer debt, my credit card that just piled up honestly when I was like living out my car. But now like I've been getting my first checks and I just got current. So technically I feel like I'm on baby step like 0.5 because I have half of the savings for Baby Step 1. But my issue is just, should I get another job on top of this? Like, I don't mind honestly working that much. It's more so just, like, is that a viable option? Yes. Like, when it comes to taxes?

Yeah. Because I've done that before. Okay. Yeah, here's one. Because you're willing, that's all I needed to hear. Once somebody like you says, I'm willing to do it, I think you do it because you have just overcome tremendous amount of challenges. It feels like you're in a safe and stable situation with your parents. And I like working that second job because you're going to get through baby step one so much faster. And then you start tackling the debt and you only have $5,000.

Is that what I'm understanding? That's all you've got? No, I have $35,000 in student loans. Okay. But even said even that, even $35,000 on top of the $5,000, so $40,000, you can pay that off before you know it, and you talk about a rebound in your life and momentum and accomplishment. I think working hard and not having any time left for just about anything

other than sleep, I think it's the best thing for you right now. I really do. I would absolutely do it. What are you going to school for? I'm going to go for information systems. I switched from psychology because I kind of realized I like working with special needs kids and these accessories they have aren't as, you know, savvy as I would have thought. So my attempt is just to get into a program or some kind of foundation that's aimed at creating apps for special needs.

Okay. Are you cash-flowing this? So you're living with mom and dad. Are you cash-flowing the school, or is this part of the student loan debt we're dealing with? That's honestly what I'm doing for school, cash-flowing it. It's my in-state college so it's about four thousand for three classes which to be honest is pretty good so i was just gonna cash

flow it pay it off during the summer and same thing for each semester i have i'm a junior technically um in psychology so when i transferred from my older college, I'm like 27 and I left college in like when I was like 22. So I transferred and they pretty much said I'm about 70% done. So I have about a year and a half. Awesome. What are you doing for the full-time job and what do you make doing it? I'm a help desk analyst at like a local gym and pretty much 40, but that's before taxes. After taxes, it's like 30. So 40K at the full-time job?

Yeah. Awesome. Well, here's another option too you can look into. Is there a full-time job where you can stick to 40 hours a week, but you could make 50 doing very similar work? That's another option. But for now, go get that side job while you're looking for that new full-time job. Because I want this to be sustainable for you. So you can always scale back. But if you can even get out of this credit card debt and cut up that card and

close the account, you're going to be in a different place financially. Nope. Okay. I'm just so proud of you. No, that credit card is not a crutch. They're not your friend. It's only going to compound the problem. That's right. Listen, Chi Chi, your parents have opened up their home to you. And in this season of getting stable, there's just no reason for a credit card. There's just not.

Not when you got their support system. Am I understanding that correctly? I mean, they're totally supportive. So you don't need the credit card. They're just not. Not when you got their support system. Am I understanding that correctly? I mean, they're totally supportive. So you don't need their credit card. People in your situation think that the credit card is the fallback. It's this emotional safety net. But that's why George- At 25% interest. That's right. That's why we want you to get that baby step one, $1,000 in the bank account as a true emergency fund. Plus you got mom and dad, you got a safe haven. You just don't need that credit card.

And with very little living expenses, you're going to find some traction real quick as soon as you get this other job. Okay. I definitely will find something. You're incredible, Chi-Chi. Chi-Chi, listen, we're really proud of you. I love that you got your head up high, shoulders back, and you have decided to

move on. And I'm telling you, George, I've seen it time and time again. It doesn't always have to be money-related, but when someone can come out of a season of, let's just call it a storm, and make progress, whether that be, again, physically, mentally, spiritually, certainly financially in this case. It is such a momentum builder to go from I was here, and now I'm here, and there's that sense of accomplishment and working until you can't work anymore and you're falling into bed and all you're doing is either studying for your future, learning for your future, and working for the now so that the next is what you want to be.

I mean, that's a good prescription for somebody who was homeless. Oh, yeah. Activity, baby. Activity that's showing me results day in and day out. There's a certain sense of belief, and then the confidence follows the belief. It's like, okay, I believe I can get there, and as I see myself making progress there, the identity changes. Haven't you seen that? Yeah, well, and what Chi Chi just did was move from victim to victor, and she could easily have been like, well, after what I've been through,

Ken, I've got it. No, she got up and she's fighting every single day to do work that matters, get the education she needs, get the support she needs, work as much as she needs to provide for herself. And that level of belief where you have an agency, we call it locus of control. You have this sense of agency over your life that I actually do control things. Life doesn't have to just keep happening to me. And what she did is incredible. I don't know how anyone listening has an excuse after listening to her inspirational story. Yeah. And we were talking about this and you deal with this a lot. People feel like that credit card is the emergency fund, but I just don't see any data. And I doubt you

have either that flies in the face of the conventional wisdom we've given for decades, which is the $1,000 emergency fund. It's going to cover most emergencies. Yeah, it's the ankle biters. And for the rest, we'll deal with those as they come. But traditionally, what happens is you end up using the credit card as a crutch. And at 25% interest now, as the interest rates keep rising. Is that the average right now?

We're seeing 20% to 25% APR. And it's crushing people because people, I mean, just doing the math on that hurts your brain to go $5,000 at 25% interest. And it keeps climbing every month because you make the minimum payment. These people are not your friends. They're snakes. And you play with snakes, you get bit. And so the best way to do it is to just remove that option from your life and go, if I don't have the money, I've got to figure it out. We've got to get creative.

We've got to sell some stuff. We've got to go to work. Yeah. And there's just such a sense of accomplishment even when you're working hard. We've seen it many times on this show with the Debt-Free Screamers, just working insane hours. Something you just didn't think prior to a journey like this, this gazelle intensity we talk about. You didn't think it was possible. But when you have a deep why, man, it changes everything.

You're willing to do it for a season. It really does. Hey, I'm so excited about your future, Chi-Chi. Thank you for sharing just a little bit of your story with us. You are tremendously brave. You are on the way up. The best has yet to be. Thank you so much for calling into the show.

All right. We've got to do a couple quick commercials. We'll be right back. Don't move. This is The Ramsey Show. Welcome back to The Ramsey Show. Thrilled to have you with us. I'm Ken Coleman. I'm joined by George Camel. We're here for you this hour, 888-825-5225. That's 888-825-5225. Today's question brought to you by Neighborly, your hub for home services. When something in your home breaks, Neighborly is the name to remember.

And with the Neighborly Done Right promise, you know you'll get great service from their network of local home service providers. Go to Neighborly.com today. Today's question comes from Tony in Colorado. My wife and I recently started Financial Peace and really enjoyed it and it inspired us. As a result, I started working overtime at my job so we can hammer out our debt. We originally agreed I would work four shifts of overtime, which is about 30 extra hours per week. But after just two weeks, I feel guilty for leaving my children. I've got two

girls, two and seven. I'm leaving them so often and leaving my wife to care for them all day, every day. Even at this pace, it'll be 13 to 16 months before we're out of debt. Should I cut back on my overtime a shift or two to be more present as a father for my children and more present as a husband for my wife, or should we both stay the course attacking our debt until it's gone forever? All right, I'm going to answer this how I would answer it. George, you can weigh in. I would stay with it. I would stay the course. I might alter it from time to time, meaning I'd commit to it for as long as possible. And then if there's one week in a given month where I'm going to pull back a little bit just to kind of soothe my heart. Because here's the deal. The two and the

seven-year-old, while obviously missing their dad, they're so young that it's not having a negative effect on them right now. So that's why I'd stay the course. But if you get to the point where your heart is hurting, and I've been there where you want to see your kids, maybe a couple of nights in a week you dial back so you're not still doing the 30 hours, I believe it was, per week. Maybe I dial back to 25 one week, all so that I can spend a little time with them. That gets my heart kind of full again, and then I get back at it.

I just think it's the rhythm that he's got to listen to his heart and determine the rhythm that way. Well, just based on how he's phrased this, he said, I feel guilty. So what it tells me is reality may be different. I agree. Have a conversation. Have a conversation with your wife and say, hey, how are we doing? I want to check in. I know this is a lot. And she may go, oh, all good here. Right. And it may just be in his head. Now, if she says, this is a lot, it's crushing me. I need you here more. Let's dial it back. Now, here's the numbers on baby step two, which is where you guys are at getting rid of this debt. The average time it takes people to get out of all consumer debt is 18 to 24 months. Currently, you are on track to do it in 13 to 16

months. And so if you dial that thing back and it takes you 18 months, 20 months, 22 months, you're still on track. Now, if you said, hey, it's going to take me four years to do this, if I cut back, I'd say, no, we got to keep going. This is a big pile. But based on your numbers, that's reasonable. Let's scale it back. But also, don't let the guilt cause you to make a decision. Let it be from a real conversation.

That's right. Good advice there. And thank you again for the question. All right, back to the phones. We go 888-825-5225, taking your money questions, of course. And I'm here today to give you some perspective on work, if that's somehow gumming up the whole process or just making it hard on you. Life is too short to work in a place that diminishes you and depletes you. So if I can help on that, I bet you we can find you some more money in the process. All right, back to the phones we go. Dolores I can help on that, I bet you we can find you some more money in the process.

All right, back to the phones we go. Dolores joins us now in Orlando, Florida. Dolores, how can we help? Hello, thanks for taking my call. I had a question about my mortgage, and also I'm trying to figure out how to allocate the money that I have left over after doubling up on my mortgage. So I already have my fully funded savings. I already don't have any debts. So really I'm just at the point now of trying to pay more for my mortgage. So once I pay double, I'm actually at a little over that point that you say, I think it's 25% of the monthly

amount of your income. And so I'm trying to, I'd like to do some updates to my home, but it's very difficult for me to justify taking the extra money I have and not putting it towards the mortgage and actually putting it towards doing the home or doing anything to it. So I was just curious what your just basically an opinion of does it make sense to hold off on doing any kind of updates or anything like that to the home now or just pay off everything

or am I just being stingy with myself? So what are these updates? Updates? Nothing huge. Just things I want to do to make my home more comfortable. You know, things like, you know, fixing, you know, windows, screen doors. Just simple things.

Nothing that has to be done. Okay. What would it cost to get all this done? I'm guessing probably if I, at this point, probably about $30,000. But, like I said, it doesn't all need to be done. And quite frankly, it's, yeah, it's nothing that's necessary. But like I said, it doesn't all need to be done. And quite frankly, it's nothing that's necessary. So we can chip away at this over time? Yes. Okay. If I'm in your shoes, here's what I'm doing. I'm going to set a goal in both areas.

I'm going to set a goal to pay off a certain amount extra on the mortgage, and I'm going to set a goal to save up enough to do some of these repairs every year. And so if you have both of those, you won't feel like you're out of control in either area. So what's left on the mortgage? $66,000. And what's your income? Before taxes, the gross is $100,000. Awesome. Okay. And right now you're making double mortgage payments. Yes. Okay. So if we kept the double mortgage payments, how many years would it take to pay off the house?

It would be five years. That's awesome. And how long would it take with the extra money then to do all these renovations and updates? Well, that would probably take a little bit more than five years, considering all the things I want to do. I mean, just paying for a screen door to a patio is like $10,000. So that will take a little longer. Okay. So you could even dial back the mortgage and say, hey, I'm going to pay it off in six years, but I'm going to get these renovations done in the next three. See, when you're through baby step three, we say

you're moving from intense to intentional. And so I love that you, I had a big goal of paying off the house early. So I attacked it as if it was consumer debt because my wife and I just wanted it that badly. But if you're saying, hey, I really would love to be a little more comfortable. I've worked hard. There's nothing wrong with slowing down that home process. The key is we paid off early. We retire with no mortgage. That's the goal. And you're going to get there. So we're just arguing over a year or two at this point. Right. So I think that I hope that helps, but it's a tough one, Ken.

When people get to that stage, there's so much guilt because you want to see the mortgage gone, but you also got to live your life and the windows need to be replaced. I agree with you on that. I loved how you broke that down. I mean, you don't want this ultimate goal to end up, you know, for the future to end up hurting you in the present. And you're still making headway, but you got to live. But I remember that. Like any outside expense when we were paying off debt years ago, Stacey and I, I mean, it irritated me to no end. It was like I wanted to suspend life and go, whoa, whoa, whoa,

whoa, whoa, whoa. Can you come at me life after I get through this? And that's just how it goes. I like to split the difference. I think it feels like you're not out of control on either side if you just go, we're going to allocate five or 10 grand a year towards home renovations. That's simple, right? Yeah. We're going to throw a thousand bucks a month into a savings account for home repair. That's 12 grand a year.

Yeah. The rest is going towards the mortgage. Yeah. And set a goal in that area. Yeah. Do you have a home repair? Do you do that? I pay a guy. So we have the home repair fund that goes to pay a handyman when and if we need one. Yeah. And set a goal in that area. Yeah. Do you have a home repair? Do you do that? I pay a guy. So we have the home repair fund that goes to pay a handyman when and if we need

one. Yes. Right. I know you don't do it. So you thought I was confused. See, that's why I'm a fan of our friends at Neighborly because I'm like, I'm not doing the DIY game. Oh, no. Have you been to Lowe's? It's very stressful. Some people love it. Now, I got to tell you, this is a tree. I enjoy a jaunt up and down the aisles of lowes or home i'm just picturing you jaunting up and down i do i do enjoy it now uh meaning i enjoy the purchase process and kind of it but i don't i don't enjoy doing any i love the smell of lumber as much as the next guy can but to try to find an employee to find the three inch screw that i need that i saw on the website i mean they don't know what's going on. They're just walking around going, I thought it was in this section.

They must have moved it. You look at the signs on the aisle, then you go and you look up and down at all the screws. It's a 5K to get through those aisles, Ken. The place is giant. All right. Little legs. I don't mind it. But I do, you and I both are challenged.

We're handyman challenged, that's for sure. I like to support local businesses. Yeah, you know what? See, it keeps the economy going. That's all to support local businesses. Yeah, you know what? See, it keeps the economy going. That's all we're doing. Absolutely. And you know what? By the way, this is why the whole envelope system, which is now every dollar, you know, that's why it works.

You go in, you go, oh, I'm trying out loud. Gotta pay the handyman. I gotta fix a window. And with inflation these days, who knows how much a new window costs. It's pricey, Ken. Yikes. Alright, Thank God. Can we just say thank God for all the handymen and handywomen out there? Mad respect.

All the handywomen out there that help us out. And the DIYers who go, I'm going to do this myself. No, I don't have any love towards them at all. It's all jealousy. All jealousy and envy. All green with envy. Green with envy because I can't fix anything. I can barely put gas in my car.

And that, I need the YouTube video. But hey, I digress. We can't help you out with your calls, though. That I promise. Don't move. This is the Ramsey Show. Welcome back to the Ramsey Show. I'm Ken Coleman and I'm joined by George Camel. We are thrilled that you are here with us the phone number to jump in is 888-825-5225 and uh well if you've been paying attention at all to social media or the news you probably heard the phrase quiet quitting have you heard this george oh yeah it's all over yeah there's a new one now too a bare minimum monday there it is i know you'd know yeah it's all about just i'm going to do just the least amount possible to get a paycheck.

And it's kind of pathetic. It comes from the anti-work movement. It does, George. Where they go, all work is unethical. We shouldn't have to do this. That's right. Employers are scum. Yes, the government, please take care of us.

And boy, that never ends up well. It's exhausting. But I digress. So here's the thing. What if you could actually do work that you looked forward to because you were good at it, you enjoyed it, and it created results that you cared about? That's what I would call the dream job. It's not this far away thing, you know. High in the sky. No, it's actually, I just spend most of my day using what I do best

to do what I enjoy to create results that matter to me. I call those three elements talent, passion, and mission, and it's the key indicators that we give you in the Get Clear Career Assessment. This is an assessment we create in about 15-18 minutes, and you're going to get a detailed report on what you do best, think talent, and then what do I love to do. This is work I'm passionate about, and then what motivates me? What gets me out of bed on a Monday morning? That's what the assessment does for you. It puts it all into a purpose statement along with your detailed report so you can begin to see what your professional future could look like where you're making a lot of money and experiencing a lot of meaning.

You can get it right now at RamseySolutions.com slash get clear. That's RamseySolutions.com slash get clear.. That's RamseySolutions.com slash GetClear. That's the GetClear assessment, so check it out. All right, the phone number is 888-825-5225. Let's go to Candace, who joins us now in Huntsville, Alabama. Candace, how can we help? Hey, I'm 24, and I'm halfway through Baby Step 2. And my question was, would it be a bad or a good idea for me to pay for my mom's life insurance?

And why are you wanting to do that? She just kind of lives a really volatile lifestyle, and I'm just kind of worried if something does happen. She has a lot of debt, and she won't get it for herself. I mean, she's borrowing money from her children half the time. So. From you? Yeah. Why are you letting her continue to borrow money if you don't think she manages it well? Well, here recently, she always saves it back. And I just, but here recently I have set that boundary and it's no longer happening. So why, why is life insurance the next step?

Honestly, just a lot of stuff happened recently, like this, just in her life. And I was just wondering if, like, she kind of needs it. So I'm like, I guess i just want to be protected i guess who's reliant on her income um no one i guess so she doesn't need insurance the point of life insurance is to replace income so a spouse or a child that's really i didn't know if it was oh sorry i just didn't know if it would cover oh, sorry. I just didn't know if it would cover, like, or if her debts would be our responsibility. No, they won't be unless you co-signed on them. So no one's co-signed, right?

No, no. Okay. So this would all get paid out of her estate if and when she passes. But it's not going to get passed on to you. The creditors can't come after you and say, well, you're on the hook. You didn't take out the debt. Oh, okay. I just didn't know because I guess her beneficiaries are my sister and I, so I just didn't. I was worried. That's good. Glad you called. But listen, she took out the debt and that would die with her. So you don't

have to sweat that. Now, as the beneficiaries, you would just get nothing or less if she owes a ton on her estate and it gets taken out of her retirement accounts to pay it. But you're not on the hook for this. She doesn't have any of that. Yeah, that's the thing. So you're not really the beneficiary of anything. Now, she can get life insurance, but I don't think she's going to do it, and you would need her consent to do it, and you would need to be an insurable interest, according to the insurance company. And is she in good health?

Not really. So she might have a hard time getting life insurance. Yeah, we got a few quotes, and it was anywhere from 100 to 300 a month, due to her age and just the lifestyle. And if she wants to get a small policy to cover her final expenses, funeral, things like that, that's fine. But you've got to have the conversation with her. It's going to be hard to do it. We have. And that's kind of the whole reason I asked is because I'm like, if she's like so bad with money, I feel like she would take out life insurance and then like just stop in like seven or like four to five months or a month. I just don't think life insurance is going to change her behavior at all. And that's the root of this issue. Right. So I would help her get on her own financially. I would set up a boundary and say, mom, we can't let you continue to borrow money.

We want to support you in any way we can, but it's not going to be financially. We can't do that. Right. Yeah. And so that's a hard conversation because she's probably going to have a hissy fit yeah she's been using you guys as the bank i mean she did recently yeah i mean that's that was the response i'd be done with it man i just can't i'd say mom i love you too much to let this hinder our relationship and letting family borrow money like this is one of the best ways to destroy it but i but let me you something, Candace, I would expect, hope it doesn't happen, but even though you said there's some clear boundaries now, I would expect that she's going to come back again and you need to be prepared for that.

Oh, absolutely. And she's probably going to throw a tantrum and make threats and say, you're not getting, it's fine. I love this relationship with you, but it's not worth it if it's got these weird financial strings attached. Yeah. Yeah. That's tough stuff. That's really tough. Setting those boundaries up, getting parents to manage their money well. Yeah. Let's go to Alyssa now in Sacramento, California. Alyssa, how can we help? Hi there. My name is Alyssa. Thanks for having me on the show. Just wanted to ask you a question regarding my husband and I. We just found out that we're eight weeks pregnant with our first child.

Yay! Yes, unexpected, but it's a joyful blessing. I wanted to see if our goal was to purchase a house. Wanted to see if we could still do that while preparing for a baby financially as well as living on one income, potentially. Okay. So where are you guys at financially? Do you have any debt? No debt. Do you have an emergency fund? We have six months saved.

Awesome. What about down payment? Down payment, I have $500. $500? So basically we put it, $500 because we put it on hold while my husband finishes student teaching where he's teaching full-time for free to get his credential, which he should have at the end of June. Okay. So what is the goal for down payment and house purchase? So our goal was to take, because we think that we could do fine with a three-month emergency fund because we never use it. We plan to build up six months, which we did,

then basically get through this period without using our emergency fund, which we've done by living frugally, and then take three months of our emergency fund and make it actually into a down payment fund, add it to the down payment fund and just have a three month emergency fund. And then that would give us $8,000. Now, you're in California. I assume this house is going to be very expensive. So if we had, I don't know if you guys, I hear sometimes you guys allow people to do like 5% to 10% down on their first house. So $20,000 would be 5% down.

And so if we're doing, if i'm doing like side jobs or something what's your household income with that one income um with the one income it's probably gonna be 55 grand a year this is a nightmare looking for a place to happen okay how much is this mortgage going to be um well we were thinking of getting a duplex where we could that was our goal before the baby. No. You're going to be a landlord with a newborn with your neighbor next door knocking when the HVAC goes out? Yeah. I think we're trying to justify the home purchase in California, and the numbers just don't make sense.

So here's what I'll tell you. I would focus on continuing to save the down payment. Let's have the baby. Let's see where we're at financially. The 5% to 10% is accurate, but it needs to be a quarter of your take-home pay or less on a 15-year fixed. And I'm guessing that changes the numbers drastically. Okay. To where now we need to find a condo in California that's way more affordable with more down payment just to make this work.

And renting is not a bad thing to do, especially in this season of your life with a little one coming in. You guys, this is a fun new chapter. Let's adjust to that. As George said, keep saving. You guys are not going backwards by renting. Just be smart. Patience.

Grasshopper. Yes. Good hour, George. Always fun to be with you, my friend. I want to thank James and our crew behind the glass that keep us going. I want to thank you, America, for listening. This is The Ramsey Show. Hey, George Camel here.

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