The Ramsey Show - App - What Should We Do With a Lump Sum of Money? (Hour 1)

Episode Date: July 19, 2021

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Welcome to the Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. Thank you for joining us, America. We're so glad you're here.

Open phones at 888-825-5225 as we talk about your life and your money. All right here in front of you. The advice is free, and some say it's worth every penny you paid. The phone number, 888-825-5225. John's with us in Portland, Maine, to start off this hour. Hey, John, what's up? Dave, how are you, sir?

Better than I deserve, man. What's up with you? Well, Dave, my wife, my family, and I are debt-free and ready to pay off our house, thanks to you, my friend. And I want to know if we should pay it off today and what we should do with the rest of the $117,000 in cash we have right now. Wow. Above what it takes to pay off the house? No. $27,000 is the mortgage on the house. I have $90,000 left. Okay. All right. Wow.

Congratulations. You've done very well. Proud of you. Thank you. We've gone from where you were a long time ago to where we are now. That's a lot of hard work. Thanks to you. I didn't do any of it. You did it.

I just showed you how. I'm proud of you. So why have you not done it? Well, we set the date for when our oldest son, youngest son, graduates high school, which is two years from now. But as the number gets to a very manageable number, our oldest son just graduated. We thought maybe we should just pay it off now. What I want to do, the other part of the question is that mortgage is at 2.75%. We've paid it off like a 10-year loan since we refinanced it a while back. So it'll be paid off in two years. I no longer work as a bartender that I used to do. I'm building rentals and tiny

houses is my goal. I want to put the money we have into real estate and building these tiny houses and renting them. So you're going to borrow money on your home to put money into real estate and tiny houses? Say again? You're going to borrow money on your home to put money into tiny real estate and houses? So you're saying pay off the house first? Well, you knew that before you called. I thought you'd tell me. You told me 14 times, thanks to you, thanks to you, thanks to you. That indicates that you know what we teach, right? Yes, sir, I do. I'm not making fun of you.

I'm just curious why you haven't done it. It just seems like a no-brainer. I guess we've made decent money more recently, so we haven't always had that much money. Let's pretend you didn't have a mortgage. Yeah, I pretend that a lot. And you had $90,000 in the bank. Yes. In order to have $117,000, would you go borrow $27,000 for two years at 2.7%? I would never borrow again.

What's the difference in that in this discussion? I guess I look at, I guess I've had the mortgage, I've had a payment forever. It just gives you a warm, cuddly feeling to have a mortgage? At $2.75, it doesn't give me a bad feeling. Well, then go get you a $270,000 one. All right, so we'll pay off the house. That's good, because I want to pay off the house, truthfully. My point is you should have done this like a year ago.

Well, but I like a buffer, Steve. I like a buffer because I don't borrow money. Okay. Then you don't need my opinion. You can just do what you want to do. It's okay. We're friends. I think you're awesome.

You're working the John plan, and it's a great plan. It's working for you. But if you don't work a day plan, you would have paid off that house as soon as you got an extra twenty seven thousand dollars above your fifteen percent going into retirement and above your kids college savings and um and then we go about the business of building wealth and we use some of that wealth in your case to build tiny houses and buy real estate which is your dream and you're going to do all of that with cash because we don't borrow money and you know all of this, John. So it's up to you, though.

You get to choose. But when you already know what my opinion is, you don't need to call and ask me. It'll save you time. I appreciate you, brother. Chris is in Boston, Massachusetts. Hey, Chris, what's up? Mr. Ramsey, thank you so much for taking my call. It's an honor.

An honor to speak with you, sir. How can I help? Well, I'm wondering if you can help me decide whether or not to keep or sell my motorcycle. Okay. So on Baby Step 2, I started a little over two and a half years ago. Started at $163,000. I'm down to $71,000. So it's going pretty good way to go but uh but thank you but um you know now that the finish line is getting closer i'm just trying to figure out

anything extra i can do i already have three jobs the motorcycle is like my little oasis but if i sell it i can probably get you know $16,000 for it or so, which would bump me up by about six months in paying off my debt. And you have a car, I take it. The motorcycle's a toy. It's for enjoyment? Yes. And what's your household income?

I make about $66,000 a year. And what is your car worth? It's a hoopty. It's probably only worth about $3,000. So your motorcycle is worth five times what your car is worth? Yes. That's bass-ackwards. Yeah, I got the bike before I found out about it.

I know. I know. I'm just saying the net result is still there, right? Yeah. I mean, you're not doing anything wrong. I mean, it's a valid good question you've got. So it's completely up to you. You're not out of line on your numbers, okay?

You're going to be debt-free inside of two years either way, right? Yes. It's about 22 months if I don't sell it and six months plus if I do. Yeah, and my rule of thumb is simply, you know, if it got you out of debt, if it was going to be three years and it got you out of debt in two years, I would have done it because anything over two years, I start to get the quivers. I start to shake. I want you out of there faster than that with your gazelle intensity because, dude, you are game on.

I mean, you're working every job. You're not doing anything. You've got no life. The only life you are game on. I mean, you're working every job. You're not doing anything. You've got no life. The only life you've got is a motorcycle occasionally, but you don't even have time to ride it because all you do is work. And so, you know, you're doing everything the way I did and the way I teach people to do to get yourself free, right? You want freedom.

Of course. Yeah. So I don't think there's anything wrong with keeping the bike, and there's nothing wrong with you saying, I'm going to accelerate this. Someday soon I'll buy another bike after I upgrade in car. And, you know, the total of everything with motors and wheels should not be over half your annual income. You've probably heard me say that.

It's too much invested in things that go down in value, and bikes and cars and boats and Sea-Doos and all the other crap we buy, four-wheelers with motors in them. They all go down in value, and bikes and cars and boats and sea-doos and all the other crap we buy. Four-wheelers with motors in them, they all go down in value. And golf carts, that's another one. And got to have one of those to drive around the HOA, apparently. Apparently the car won't work there. But the, so, yeah, anyway, this crap we all buy, so, yeah, it's okay to keep it because you're going to be under two years.

And what would I do if I woke up in your shoes? I'd be on the bubble because I want to be out of debt so fast. But I also hear you that it's your oasis. My oasis is my boat. If it was my boat, what would I do? I'd probably sell it if it was my boat and get another boat later and get me a little better car. Because the thing's three times, five times what your car is worth. That's bothersome, too.

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old insurance policy might not give you enough coverage anymore you see your insurance policy does not automatically go up with the value of your home and so your agent has to be doing like their job and stuff and call you and like do stuff like they're supposed to do and raise the coverage to match the actual value. However, they have an entire filing cabinet full of people like you, and they might not be thinking of you. It's possible. It could happen. Do you hear the sarcasm?

I hope so. So what you need to do is you need to go to one of our endorsed local providers, and you need to go ahead and shop your homeowner's insurance. It's a really good time to do it anyway. These are independent insurance agents, which means they shop among a gazillion different companies and get you the right coverage at the right price in your particular situation. Typical person saves about $700 when they move their house and their cars over to an independent agent from one of what we call captive agents in the market, meaning they can only sell for one company. And you know who I'm talking about.

State Farm. Okay, yeah, and so forth. Stuff like that, right? Excuse me, I've got allergies. And so to find a trusted insurance pro, find out the right coverage, go to RamseySolutions.com, check and search for home insurance, and we'll get you connected with one of our ELPs quickly and easily. Ryan is with us. Ryan's in Knoxville. Hey, Ryan, what's up?

Hello. How's it going, Dave? Better than I deserve. How can I help? It's a pleasure and an honor to speak with you, and we greatly appreciate your teachings. Thank you, sir. It changes our life.

I'm honored. How can we help? Okay, so we're in, well, we're just trying to get it clear. We're in BS3, and we just sold a business and a house, and we're about to get an inheritance of some money. Wow. And we're trying to see if we should pay off our home. Lots of piles of money.

I thought you sold your home. Yes, sir. Or you sold a house, not your home. We sold a house to buy a new house. Okay, so what do you owe on your current home that you're asking about paying off? Approximately $170,000.

Cool. And the inheritance and the business sale, how much is the inheritance? It'll be just about $200,000 after the sale. Okay. And what did you get from the sale of the business? The sale of the business plus the house that we sold, right?

Because we had money. We took a loan. You know, we didn't pay off the house. So in total, what we have after emergency fund, we have $279. That's from all three sources, the sale of the business, the house, and the inheritance.

No, $200 is not. The sale of the house we haven't collected yet, so that's not part of $279. Okay. And, again, your mortgage balance was $170, right? Correct. Okay. And, yeah, I'd buy the check today and be debt-free. How old are you?

Forty. Golly, you're going to be so rich. Listen, dude, seriously, seriously, I'm not being sarcastic. You take, what's your freaking house payment? A couple of grand? Not even. Yeah, so if you take a couple grand a month, since you don't have a house payment anymore,

and you stick that automatically into a mutual fund, you understand in 20 years how much money that is? It's millions of dollars. A lot. Just by paying yourself a house payment instead of those goobs in New York. Correct. See you, Bank of America. Out of here, countrywide.

Correct. We'd be Ryan-wide. This is awesome. Way to go, man. Exactly man exactly yeah we're stoked you're 40 years old you know freaking pay for house what's this house worth uh we 319 yeah and you got paid for house and you got a hundred thousand dollars in the bank and you got more coming from the sale of the other house correct and i'm gonna be you know working and bringing in more money as well yeah well i mean we're gonna retire on this but it sure does put you if to be working and bringing in more money as well. Yeah, well, I mean, we're not going to retire on this, but it sure does put you,

if you keep working and investing and saving and enjoying and being generous and putting your kids through school and paying cash, you've completely changed your freaking life, man. You are going to be a Baby Steps millionaire. You're on your way. I hope so. Proud of you, man. Get after it.

Do it today. Write the check. Be done. Go out in the backyard, take your shoes off, walk around. The grass feels different when it's yours. I'm just saying. It changes everything. This is more than just math, boys and girls.

When you don't owe anyone anything, let me say that again. You need to breathe that in, America. Sally Mae Dunn got her eviction notice. Master Card is no longer in charge. American is no longer distressed. You following me here? There's no stinking car payment. You don't have a house payment you walk in on monday morning and the boss starts going

you just start walking off where are you going i don't have any payments i don't have put up with your crap anymore it changes your decision making changes your relationships it changes your future it changes your family tree right what ryan has done with his family and with the help of a small inheritance and by being diligent up to 40 years old and being smart he wasn't smart all the time none of us are i've done stupid zeros on the end. But this guy, he's a freaking hero, man. We're talking to a future millionaire right there. And that's not hyperbole.

That's freaking math. All because he decided he wasn't going to live normal anymore because normal sucks in this country. You don't want to be normal. Normal is you're putting up with a toxic work environment because you have to pay the bills. Normal is you put up with customers. When you own your own business, you don't have to.

Let me tell you what's fun. Firing an irrational customer. That's fun. You don't talk to my people that work here that way. I'll fire your butt, give you your money back, and take you out of our database. You don't get to be a butt. We don't pay our people to put up with butts. We pay our people to help people that are hurting, but you don't get to be a butt. See, it's different, isn't it?

You get a whole different sense of power, a whole different sense of direction when you don't have any stinking payments. This is the borrower is slave to the lender. When a slave is set free, it's not merely economics. It's not merely mathematics. It's choices and margin and future. It's everything on the list.

Chase is with us. Chase is in San Francisco. Hi, Chase. How are you? I'm good. I woke up clean and sober, so I'm grateful for that. That's good news. How long have you been dry, bud? About a year and a half. Good for you.

What are you off of? Thank you. Methamphetamines. Oh, tough one. You're a strong dude, man. A year and a half clean on meth. Man, that's strong. That is one seriously tough one to kick good for

you i'm proud of you you got some good people in your life it sounds like yeah intervention by my mom and my brother i love it love a good family yeah how can i be a part of your story because you got a wonderful story thank you i appreciate it um well ever since I got clean and sober, I got a really good job for me. I'm used to making $20,000 a year. This year, I'm on track to make $80,000. When I got my job, I sold cars, and I got sucked into the shiny objects on the lot and I put out a car loan. Yeah. Um, then I started listening to you right after that. Oh, I ruined everything.

Yeah. Yeah. I ruined everything. Uh, so I have about 18,000 saved, um, that I've saved in about six months and I owe about 22, I think 24 with the warranty. and I owe about $22,000, I think $24,000 with the warranty.

If I cancel the warranty, $22,000. I'm wondering, I have $60,000 in student loan debt. I'm wondering if I should sell the car back, pay off the negative equity, I think it's about $3,500, and then buy a little beater, or if I should just add it to my snowball. I would sell that car back because I think it's part of your healing overall. This is a great part of your plan. You're now addressing the realities that are left over from the addiction, and you're doing a great job with it. I'm going to help you.

I'm going to put you into Ramsey Plus. I want you to go through Financial Peace University. Use the EveryDollar app. I'm going to pay for all of it free to you because we are so proud of you. You're inspiring. You stay dry, buddy. You stick with it, man. This is The Ramsey Solutions on the debt-free stage, Eric and Rachel are with us.

Hey, guys, how are you? Hi, Dave. Hi, Dave. Good to see you. Good to see you guys. Where do you all live? We're from Boise, Idaho. Oh, that's a bit of a haul to Nashville. Yeah. Welcome all the way over to the other side of the world. Good to have you. And all the way over here to do a debt-free scream. How much have you paid off?

We've paid off $137,000. Good for you. And how long did this take? It took 30 months. Wow. And your range of income during that two and a half years? Our lowest range was $121,000 and our highest range was $148,000. Good. What do you guys do for a living? So I work for Boise State's MBA programs. Go Broncos. Yeah. And I'm an electrical engineer. Oh, very good.

Cool. And what kind of debt was the 137? Most of it was in a house. You paid off your house? Yes.

I'm looking at weird people. Very weird people. How old are you two? I'm 30. And I'm 28. And you have paid for a house. And paid have a paid-for house.

And paid-for house. We do. Luckily, we bought before the market went crazy. So that helped. Yeah, and luck didn't have nothing to do with it. You guys are on it, man. Look at you. I love it.

What's this house worth? Well, now, we just checked the other day. It's worth around $370,000. Woo! And you're 30 years old and it's paid for. That's right. And you don't have a payment in the world. No.

Stinking weird. Y'all are so weird. I love you. You're amazing. All right, tell me this story. What in the world made you decide you could pay off your house before you're 30? Do you want me to start?

Yeah, go ahead. So it kind of started when we were dating, actually. I was coordinating a financial peace class. Oh, there we go. Yeah, and I had just started dating this guy, and I was like, this can't go anywhere serious if you're not on this plan. Oh, a deal breaker right out of the gate. Yeah, I asked him to pray about taking the class,

and you could tell he was hesitant because he's an engineer. He knows math. He knows math. He knows math. He doesn't need to be told how to save money. So anyways, he prayed about it, and he ended up coming, obviously. And that was kind of the start. Eric, I'm just saying that was a good choice.

That's all I'm saying. I agree. It has nothing to do with the class. It has to do with what you got out of the deal here. Yes. Okay. Yeah. And he did a really great job.

He paid off the most debt in that class of people. And I was like, he's a keeper. He's a keeper. Yeah. Yeah. So through that process, you can go ahead. Yeah. I would say starting off, like you said, Dave, I was a little prideful.

She asked me about it. And I thought, you know, talking to a guy I'd never heard of you before. So she was telling me there's a guy who can teach you how to save money and I thought, you know, I know how to save $90 right now. I don't go to the class

and I don't have to spend them. You are the first one that has ever said that. Yeah. But, I was like, it's worth it. Yeah,

thankfully God, he softened my heart and got rid of that pride and I'm so glad that I was able to take your course. So how long into the course

after, and you can tell the truth here we're friends it's okay uh it won't hurt my feelings because i would have done exactly the same thing you did except i might have now ever gone i might have been too private to ever go but uh uh but the uh how long into the how many classes in before you went you know this is probably worth it well Well. Three, four, five? I think it was about the third class in. Yeah.

We got your book, and then I think we were going through the class, and I thought it was taking a little long, so I pretty much just read your book all night. And then after doing that, I realized, okay, there's some good truth to this stuff. Okay. There's a process here I can plug into. Because engineers are process guys, right? Yeah, exactly. Once you see the process, the baby steps, you go, oh, this stuff. Okay. There's a process here I can plug into. Because engineers are process guys.

Yeah, exactly. Once you see the process, the baby steps, you go, oh, game on. Okay. Yeah. All right. Good for you guys. Very cool. And how long have you been married?

We actually just celebrated our three-year anniversary. Awesome. So you get married, and two and a half years into the three years, or really almost immediately, you dive in on the debt, and let's pay off the house. Now, did one of you already have the house, or did you buy the house shortly after marriage? He had it. Yeah, I had bought it shortly after moving out to Boise. Okay, so you had the house and the debt,

and Rachel had the class. Yes, I didn't have any debt, and that's why I was kind of like, I need to find somebody who can get on a plan with me. I don't care if he has debt, but he at least needs to be able to get on a plan so we can work on this as a team. Okay, now that's the best dating advice there is.

We don't tell people not to date someone because they have debt. But I need some, say that again, I need someone who would get on a plan with me. Exactly. Yeah, I needed somebody who was able to say, yeah, I'm a team player and I can get on the same page with you on this because it's important to you. But you didn't need to not have any. You just needed to be a team player. There you go.

Man, I love it. That's exactly how we teach people. That's very mature, very smart, good boundaries, not manipulative, nothing there, nothing weird going on there like, you have to get out of there or I won't date you. Dave Ramsey does not say that. He says exactly what you say. So that's beautiful. I love it.

I'm so proud of you guys. So who are your biggest cheerleaders? Well, so honestly, each other. We kind of definitely helped each other out a lot, but I'd say you were. We also fought a lot. Yeah. It was hard getting on the same page. Really?

It was, yeah. What did you fight about? Well, we had just gotten married and we hadn't lived together before we got married. And he's an engineer, and I'm a free spirit. And it was like we were speaking different languages at first. So, actually, you had the budget fights then and everything. Yeah. When you sit down to do the budget, you're arguing about it.

Yeah. So, for me, I was like, oh, let's just budget to the dollar. It's not a big deal if it's to the cent. he was just like no we need to count every penny oh really yeah to the penny wow and i was just like i'm a nerd and i'm not i'm a dollar guy that's okay wow yeah so i mean there were those fights but now we don't fight is there a particular item or situation that one of you wanted to do, the other one didn't want to do, that you remember? The big fight. One of the big ones, near the end there, I got a second job. So I was working full-time and then working nights to help kind of knock some of this stuff out a little bit faster.

And obviously that was kind of a strain on both of us for a little bit. Yeah, he would work at the technology company he works at from about nine to... So what was the fight? You didn't want him doing that? No, I wanted him to do that. It just felt like it was too intense. I'm like, we already make a really good income. Can you just stay here with me?

Okay. Yeah. Look at what I've done. I've created a monster. He works all the time. That's exactly what happened. I told his mom. I was just like, I was the one that started him on this journey, and he's the one that's

the most intense. I don't know what happened what happened yeah well exactly be careful if you activate a good nerd we know how to do it man we nerds we get her done we give me a goal i'll go baby i love it good for y'all that's i like that that's smart and that that's that's real world stuff that's how it really happens yeah so the good news is you're free. How does it feel now? It feels great to be free. Yeah. We're actually kind of, it feels a little empty. We've got to figure out our next big step, next big thing to go tackle. Yeah, it felt really good at first.

And now we're just like, this is kind of a lifestyle for us. As weird as it sounds, we really enjoyed being on the same team and having money goals. And we're like, okay, what's next? What does this look like? And so it feels really good. Set you two goals and put them on a spreadsheet. And one is generosity, a level of generosity. What do you want to do?

I did that. It helped me. I want to give away this much by this time. And whatever it is, you figure it out. And then the other is go ahead and back out when you're going to be a millionaire, when you're going to be a Baby Steps millionaire, and start aiming at that. And that gives you something to aim at. And you don't have to go crazy about it.

You get to have a life. You don't have to work until midnight. You don't have to do all that stuff. Right. But we're just being intentional now and working together. You still want to have that feel of being in the harness together. And that's what you're saying. And that's very, very wise.

Way to go! Thank you. Way to go. What do you tell people quickly the reason or the thing you do to get out of debt is freedom just being able to like you were just saying earlier if your boss comes in one day and you're just not having it you know you don't have to have that stress of paying bills and you know you're free to do what you want kind of walk away and you get to be in charge not not the credit cards yeah and i would say get on a budget. Make sure you're on the same team.

And then tithing was huge for us. We had so much money pouring in during 2020, and it could only be explained by God. I mean, there was so much coming in. Yeah, so many blessings that came from tithing, and I think that's a huge part. We got a copy of The Legacy Journey. That's your next chapter in your story to be Baby Steps Millionaires.

You're on your way. And we've got a copy of the Total Money Makeover for your giveaway and start someone on their journey. Thank you for leading the class. Yeah.

And thank you for leading the most important people you've ever had in the class. His name's Eric. Yeah. Good job. $137,000 paid off. 30 months.

That's house and everything. They're not even 30 years old. $121,000 to $148,000 income. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Yeah!

Couple of weirdos. I love it! Thanks for joining us, America. This is the Ramsey Show. Aaron is with us in New Hampshire. Hi, Aaron. How are you? I'm doing well, Dave. How are you?

Better than I deserve. What's up in your world? So, Dave, I had a question for you about Baby Step 2. I'm currently in the moment about to move into an apartment next month, so I'm currently pausing. But I actually had a dream about asking you this question. I wanted to see what your actual answer was. So I make $47,500 a year, and on my car I owe $14,000, and on my student loan I owe about $7,500. Now, typically in the Baby Steps I know that I would usually do $7,500 first and then the $14,000 and my student loan, I owe about $7,500. Now, typically in the baby steps, I know that I

would usually do $7,500 first and then the $14,000. But my company I work for pays for my student loans. I just have to make an extra payment with it. My student loan payment right now will be about $30 a month. And so part of me thinking, why not just tackle out the car and just have the company pay the $166,000, and I just pay the $30,000 until it's paid off. I just want to get your thoughts on that. That'd be okay. It'd be okay.

But here's the thing. If you switch, all we're doing is switching them. That's all. We're not going to slow down. So you're going to put all the money you can find on your car until it's gone. And then even though your company pays the student loans, you're still going to put all the money you can find on the student loan until it's gone. So the only advantage we're getting is the number of months it takes you to pay off your

car. You're going to get some money out of your company, but that's all. So how fast are you going to pay off your car? My car will be paid off probably in the next couple of months. I have about $10,000 in the bank. I'll probably have around, by the time I get there, it'll probably be around like $13,500 to like $13,000. I'm sorry. Wait a minute.

I'm sorry. Let's start again because you said you were doing the baby steps, and I got confused. Yeah. Okay. Yeah. So the baby steps are and I got confused. Yeah. Okay. Yeah. So the baby steps are baby step one's $1,000. Any other money you have goes on your smallest debt, and you work your debts off smallest to largest in baby step two. And so your car balance is what again?

It is $14,000. Okay. So what we're going to do is we're going to have a $4,000 car balance when you get off the phone, or actually a $5,000 because you need to keep $1,000 in your account. You said you had $10,000 in the bank, right? I do, yeah. Sorry, I didn't clarify this piece. My bad.

Because I'm moving into an apartment and I have an idea what the expenses look like, but I'm currently pausing on Baby Step 200. Oh, you did say that. That's why the money is there, because you're paused. Correct. Okay. Okay. Then I won't be such a smart ankle.

Okay. No worries. Sorry about that. All right. So, okay. Yeah, let's do that. Now, when you finish your move, any money that's left above $1,000 goes on whichever debt is remaining.

Agreed? Agreed, yes. Because you push play again. Yes. Okay. Now, once we're doing that, then when the car is paid off, then you attack the student loan with the same vengeance that you would have even if your company wasn't paying it. I don't want to use your company money as an excuse to stay in debt longer.

Instead, we're going to use your company money as a way to get out faster, but that only works if you put the same amount on the debts you would have, and you should be debt-free in one year. I agree. Okay. So really, at the end of the day, what we're actually going to end up getting out of this company is about $1,500. Yeah, that's about right. Another quick question on Baby Step 2 that I wasn't sure about is, when I'm paying off

the debt, is it okay just to pile up the cash and then pay it off in one check, or does it make sense to just keep throwing extra payments and then it's gone? It's better off to pay the extra payments because both of these are on what's called simple interest, and whatever your interest rate is on your debts is larger than the interest rate you would get in savings. And you're getting credit for it the day you send it. Once a month. You can't get it daily credit, but once a month it's compounded. I see.

So it works out better. You're doing really good. Here's what the good news about your situation is, Aaron. You're really, really thinking about this. You're really analyzing it, and you're paying attention. The reason most people are broke is they don't pay attention. They don't have any idea what's going on. And you've got what's known as a clue.

So you're looking for all these nuanced little answers down inside the program, and that means that you really are dialed in. And that a cool thing i'm so proud of you you're going to do great sam is with us in albany new york hey sam how are you hey what's going on dave i'm doing well how are you doing better than i deserve how can i help you all right uh so couple of questions, well, eight questions about the current housing market and how much would be appropriate to spend on a house based on my income. So, I currently am making around $1,400 to $1,600 net every week. And I am planning on getting engaged shortly and so I would like to purchase a house. I don't know if this is an appropriate time to do that or if I should wait six months, seven months and then do it. Do you have any debt? No, debt free. Good. You got your emergency fund in place with three to six months of expenses?

Yes, sir. Okay. Well, what we tell folks is to never buy a home that is more than a fourth of your take-home pay on a 15-year fixed. And so that puts you at about a $1,500 house payment on a 15-year fixed. That's about what you can afford. Now, your down payment, of course, is how much you save between now and then. Add to that equation, you're getting married. I'm okay if you wait until a year after you're married.

Actually, there's a lot of wisdom in that. It takes about a year of being married to know how close to your mother-in-law to buy. Right. You kind of got to get to know your wife, because the problem with buying a house before you're married is you will discover after you got married that you bought the wrong house, because she will tell you. Yes, sir. So that can happen.

I mean, it's happened before. All the guys, all the old guys are laughing right now. So, yeah, but the, you know, so, I mean, it's up to you. You can buy, but I would have her not make the decision but be very involved in the selection so you don't have to rebuy later. And I'm not going to do any of this out of a panic because I'm worried about this real estate market. This real estate market's crazy.

But here's the thing. Real estate is not a short play. It's a long play. Here's what I mean. Okay? How old are you? 24. Good for mean. Okay. How old are you? 24. Good for you.

Okay. When I was, the house that I bought when I was 24 was $52,000. Today it would sell for a half a million. Okay. I'm 60. I'm 60. So what's the point of that? The point of that is, and by is and by the way the real estate

market was quite hot when i bought that house it was crazy people were just going nuts interest rates were coming down after having been really high and everybody was just jumping on anything that moved it was kind of a little bit like now right now it's hotter but uh point being that all of this stuff measures out and mellows out given a couple of decades here or there. And so you're probably not going to be in the house you buy that long anyway, five or ten years on average. And you're going to, you know, so if you wait a year to buy it and it goes up some, it's going to go up more between now and the time you're old like me.

So you've got plenty of time, dude. So there's nothing, don't ever get house fever. Like, oh, God, if we don't buy a house, we're going to be priced out of the market. I mean, you know, yeah, if you don't buy a house for 60 years, you'll be priced out of the market. But if you don't buy a house for two years, you're not going to be priced out of the market. That doesn't happen. Because the markets come and go. They soften.

They get better. They get stronger back and forth. And over the scope of your life, you're going to see a lot of interesting stuff with real estate. But it's not a short-term play. It's very difficult to make money on real estate in the short term. But you can almost always make

money on real estate in the long play. Man, you do a decade play with real estate, you can really set yourself up for some serious money. Very nice. Very nice. Great job, man. Congratulations on the upcoming engagement. Hang on.

I'm going to send you a copy of the total money makeover for you to read through with your new bride. Nine million people have, and so you should, too. Hang on. Open phones at 888-825-5225. That's what we do here. We talk about getting you out of debt in the shortest possible time. And it's not just about getting out of debt. It's about getting out of debt so that you can be outrageously generous.

It's about getting out of debt so that you change your family tree. It's about getting control. Because if you can control your spending, you're controlling almost every aspect of your life. Because it all flows through your spending, just about. Money's not important at all. What it does, oh, when it puts food on the table and shoes on your kids, it's really important. Well, what it does is important. Money itself, it really doesn't matter. So it's all about control. It's all about growing up. It's all about long-term thinking and maturity. And we'll help you about control. It's all about growing up. It's all about long term thinking and maturity. And we'll help you do that. It's what we've done for 30 years.

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