The Ramsey Show - App - What’s Going On With the Real Estate Market Right Now?

Episode Date: June 8, 2022

Dave Ramsey & Rachel Cruze discuss: Paying off the house or investing the money, Minimizing capital gains tax, How to tackle debt after you get married, Balancing a safe living situation with paying off debt. Want a plan for your money? Find out where to start: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6

Live Live from the headquarters of Ramsey Solutions, 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. This is the Ramsey Show, where we help people build wealth, do work that they really love, and create actual amazing relationships. Open phones here at 888-825-5225. My co-host today is Rachel Cruz, Ramsey personality, number one best-selling author, and my daughter. Open phones at 888-825-5225. Charles is in Green Bay, Wisconsin. Hey, Charles,

welcome to the Ramsey Show. Mr. Ramsey and Mrs. Cruz, it's truly an honor to speak with you. You too, sir. What's up? Okay, I want to be rare people without paying any stupid tax, so my question is, I make about $150,000 a year combined income with my wife. We have $65,000 left to pay on the mortgage. That's our only debt. I started a new job about six months ago, and July 1st is when I can start investing. So in the meantime, I've been tripling and quadrupling my payments, my mortgage payments. So my question is, should I stop that and keep investing in whatever, or should I start investing? Also, we have $40,000 in savings, and it's an emergency fund. And when my mortgage gets down to $40,000, should I just pay it off?

I know my expenses will go down without having a mortgage. I don't know what to do right about there. Yeah, it's all great questions, Charles. So currently, I would say when you can start investing into your company's 401k, then I would back down the mortgage payments and pay up to 15% of your income. And I would be putting that into retirement. And then anything else that you have, throw it at the house. But when you guys get down to that 40,000, I would not empty

your emergency funds. You can maybe a little bit if you don't need that all 40,000 for three to six months worth of expenses. You could use some of that to pay off the mortgage faster if you don't need all $40,000. But I would be investing that 15%, which would mean probably backing down your mortgage payment. We teach people to do baby steps four, five, and six simultaneously. Four is 15% of your income into retirement. Five is kids' college, doing something on the kids' college. If you have kids, and six simultaneously. Four is 15% of your income into retirement. Five is kids' college. Doing something on the kids' college, if you have kids, it's appropriate. Beyond that, everything you can find, you throw at the mortgage. So yes, it is going to reduce the amount that you're able to put on the mortgage, but you're still making plenty of

money to get this mortgage knocked out, and you've got a tiny little mortgage, so you're going to knock it out. You're going to be just fine. But no, I would, and I'm with Rachel, I would not clean out the emergency fund. But if you wanted to say, hey, I don't need $40,000 when the house is paid off. I need $25,000. So I'm going to take $15,000 of it and throw it at the mortgage right now. That gets it down to $50,000, and we're just going to attack this thing with a vengeance beyond. But I would start my 15% of my income into retirement. You know, you're going to get whatever match you get, put it into Roth 401k, into good growth stock mutual funds, stock market's down, so it's on sale, it's a great time to be investing,

and while the market's down, it's just a wonderful time, and so, you know, the bad thing about slow economic times is the stock market goes down. The great thing about slow economic times is the stock market goes down. And so it's a great time to invest. And yeah, I wouldn't miss out on that. I would be doing that. But only 15 percent, not 20 percent, not 26 percent, 15 percent, no more. Everything else goes on the house. Good questions, Charles. Henry's with us. Henry is in Albuquerque, New Mexico. Hi, Henry. How are you? I'm great. Thank you. Hi, Dave.

Hi, Rachel. Thank you for taking my call. Sure. I appreciate all you do. I am 56 years old, and I recently, last week, sold an investment property that I had. And it sold for $497,000 with all the closing costs and credits and whatnot. Basically, I had $450,000 left over. With that, I paid off a home equity line of credit that I have on the home where I actually live,

and I put $35,000 towards the mortgage. And that leaves a balance on the mortgage of $65,000. That's my only debt. I have an emergency fund for three months and i have about eighty thousand dollars in retirement accounts you did not hold back the money for the capital gains tax uh i have 350 000 my thought was to put at least 50 000 on the side for the capital gains and then any um uh i guess depreciation or whatever i thought you put it all on the mortgage already i put i put 35 000 which brought my mortgage to $65,000. Okay, but after you did all those things, you got $350,000 you're sitting on. I have $350,000, and I have a $65,000 outstanding mortgage. Write a check and pay off your mortgage today.

Gotcha. Good. Good job, man. You're going to have some capital gains though do you know what your adjusted basis was on the property i don't i'm actually meeting with my accountant to like discuss that so i'm not sure have him calculate your capital gains now because it's 15 of your gain and you've owned this property for how long you've been at had it as a rental yeah i've had it for 10 years so i don't fall within an exception

i haven't lived there no i'm not worried about that i was trying to figure out how much you depreciated it because you've depreciated it every year and uh so uh you know as you've written it off uh all of this is not going to be game but a lot of it is so you probably i'm going to give you a guess let's say you got a three hundred thousand dollar gain probably that much at least okay uh three hundred and like twenty dollar gain i think it was yeah yeah if you got a three no i'm talking about the gain of your sale price minus your expenses minus your adjusted basis which is your original basis minus the depreciation that you took okay so you've got the adjusted basis that's how you calculate the gain now i'm going to guess based on the fact you've held it 10 years and you've

depreciated it that you're that you got probably got a three hundred thousand dollar gain or so which is going to be about a forty five thousand dollar tax bill at fifteen percent gotcha so but let him calculate it exactly if he says it's sixty two thousand four hundred twenty six dollars since it's sixty five thousand aside then pay out you pay off your mortgage anyway you're not going to have so much gain you can't pay off the mortgage so go ahead and pay off the mortgage but set your capital gains aside and then beyond that now you've got all this money free and clear you got no other debt right no other debt i do have two children though um and i have about 58 000 um in um a 529 so 29 000 each but i think

my older son who's uh 16 will not be going to college so um yeah yeah so i mean you you got that money free just to invest and to do some generosity with it and if it's in an investment in your name and you need it for a kid you can always get to it right right yeah so yeah then i would sit down with a smart investor pro after you've set your money aside for capital gains to start thinking about how you're going to invest the balance because it sounds like you're going to have a couple hundred thousand bucks left after capital gains and mortgages paid still to do something with uh you may want to upgrade a car. You may want to take your wife on a trip. She probably deserves it.

Or whatever it is you want to do that's something sweet and fun and nice. And you probably want to do some of those kinds of things. And then sit down with your SmartVestor Pro to do some investing. If you don't have someone in your corner, click SmartVestor at Ramsey Solutions. We'll hook you up with the people we recommend. We're not in that business, but these are people that do the things we teach, and they'll help you to execute these ideas, these strategies. This is The Ramsey Show. Hey folks, there's never been a better time to find a job doing work you love that matters to you. That's why I can't wait to tell you job doing work you love that matters to you.

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A lot of you are thinking about moving right now. That's awesome. Moving is exciting, and there's a lot of real things to talk about when you talk about moving. If you're moving across the country, across town, you're going to be facing some sky-high home prices. Interest rates are up. And the challenge of finding experienced pros that you can trust. When it comes to something as important as buying a home, you don't use your friend's cousin who just got their license, or your Uncle Charlie, or Henrietta down at the church that just got her license.

You get a simple Google search. You know, you just randomly drop in on a real estate agent. That's not a good way to pick out somebody to sell your largest asset or help you purchase your largest asset. You should be able to find high-caliber pros that you can rely on, whether you're moving from Florida to Alaska, no matter where you're moving. And we have vetted thousands of real estate agents around the country, and we've got the high-octane, high-protein people who sell a lot of houses that can help you.

They're Ramsey-trusted agents. They are our endorsed local providers, and they've earned our seal of approval. They prioritize you over just getting a commission check. They want you to have a incredible home buying home selling experience go to ramsey solutions.com slash agent find the best agents across the country that's ramsey solutions.com slash agent you know rachel you and i were talking about real estate a little bit the other day on the air when you were on here last and um i keep digging into what's happening with the market um there's a little bit of a weird thing happening with the

bad economic news out on inflation and gas prices and now interest rates continuing to climb um and uh now pretty much the announcement that we probably are heading into the second quarter of an economic shrinkage called a recession. When the total goods and services, the gross domestic product, shrinks two quarters in a row, that's called a recession. And so when it's put on the news, it's called a recession. You're going to die. But that's not really what it is. It's just, you know, it's a recession. It just means it receded.

That's all it means. it's nothing to panic over but you add with a summertime came and a lot of people and i'm talking to some of you out there right now you like uh take a vacation on adulthood during the summer like you can go do anything you want to do stupid and you'll deal with it in the fall and i'm not going to worry about buying a house or selling a house and i'm just going to go on vacation and i'm going to spend money i don't have and i'm not going to deal with this stuff it's summer i'm putting my life in neutral and i'm going to let it get a little bit worse before i deal with it and there's a lot a little of that it's kind of a um i guess it's built into us as little kids we go to school and we get off for the summer and now people when we're adults we think we can get off for the summer yeah and we don't have to you know and so church attendance goes down

generosity goes down gym membership gym attend attending the gym to work out goes down it's not just because it's pretty outside it's because you're freaking laying around okay so uh or you're home with the kids yeah well or whatever but i mean there's school and you don't have there's this there's this mental thing that yeah there's a checkout i get that so that's adding to this real estate market stuff because people aren't jumping up and down to go buy hey because they're all frantic about buying a house then all of a sudden they go on vacation mentally and emotionally yes and so here's the thing i want to tell you guys right now this is an unusual market because we're kind of at this midpoint there's like a tipping point thing going on it's like it's getting ready to go and flip uh it's not it's not going to flip quick uh but we're at this moment in time and i would

say for the next six months this is going to be true that and you can't usually say this is what i'm saying right now is a the best time to buy a house in the next five years. Right now. And here's why. Prices are not going to go down. Some of you are saying, well, I'm going to wait for prices to come down. You're not going to get them. They're not coming down. They're going to go up slower, but they're not going to go down. They may not go up hardly at all, but they're not going to go down.

And so five years from today, houses are going to be more expensive. This is as cheap as it's going to be in the next five years. So this is the best price right now if you're going to buy a house. Well, interest rates are up. Buy the house. If interest rates come back down, refinance. Yeah. But don't not buy waiting on interest rates to come down.

Just refinance the mortgage if interest rates come down. This is the best time to buy a house in the next five years. And here's what's weird. This this is the best time to buy a house in the next five years and here's what's weird this is also the best time to sell a house in the next five years why because we still have semblance of the crazy white hot market around and it's really just vibrating it's still really like if you're a seller you really have a real hot commodity right now you got a nice house you put on a real hot commodity right now. You've got a nice house. You put it on the market. It'll go and it'll go for a really good price right now. And it may not be that way six months from now. The market may slow down enough that as a seller, you may have to sit on a house for a while to get a good price out of it.

Yeah. I don't think you're going to lose money five years from now but if you're if you got a i was talking with a friend of mine um last night that had a really big expensive property that uh he sold a farm he sold it and uh he said because this was the best time in the next five years to get rid of that that farm he goes this i didn't really i didn't have to sell it didn't need to sell it but it was timing the market that this is a great it's it's an unusual statement when you can say this is the best time to sell in the next five years and this is the best time to buy i know because it's so expensive still yeah do you know what i mean so like it's not going to get cheaper yeah yeah it's not going to get cheaper yes it's not good you can't wait on it to get cheaper because it's not going to i really do believe that and what causes right what causes real estate to go down is this a

stupid question as i'm saying when when supply exceeds demand to go yes but in the history of real estate there's only one time in the last hundred years that it went down okay ever period so year after year interest rates always it's gone up except for the recession when the interest rates went to 19 18 fixed the prices did not go down now the sales came to a screeching halt yeah people quit buying because they couldn't afford to pay payments on a 15 mortgage but uh i mean we were i was selling real estate at the time i was in my early 20s selling real estate trying to make a living doing i was in was selling real estate at the time. I was in my early 20s selling real estate, trying to make a living. I was in college selling real estate.

I sold some houses in the 15%, 16%, 17% fixed rate market. But some of them were for cash. People had money. It was a good time to buy at that time. So it's not a bubble. Well, we all just went through the last year of real estate or however long. It's just been insane. It's not going to pop and

everything's going to go down because i've heard people say it's not a bubble that that like you know in pockets of america because of the rush you know to states with no income tax of florida tennessee right that that these those are what that's done is it artificially drove the price up faster so we like we saw in 2020 prices go up 32 nationwide on real estate i mean my god insane yeah okay and this year we're predicting seven percent all right so we're gonna see and that's a pretty good rate seven percent's not a bad going up your house goes up seven percent a year while you own it for 30 years you're gonna going to be rich off your house. Yeah. So it's not a bad thing. But the bubble that is there is not on the actual price itself.

The bubble is on the rate of increase. That 32% is not – that bubble is going to burst. It already has. Yeah. It's already slowed down. It's just not gone all the way down yet. And so what's going to happen is the rate of increase is different than the price. How fast they're going up, that is a bubble.

That bubble is going to burst. But they're not going to, I don't, because all the data we have shows that there is this extreme shortage of housing. And new housing starts are not coming up fast enough to offset it. So we're not going to have an oversupply. I just wonder, though, like the houses, like I just think about, even in our neighborhood, you know, for what they're going, like a

new build, what it's going for, it's insane. But you think they can still get that price? It's just emotional. They will still get that price, though. Yeah, they will. The house that sold for $2 million two months ago, five years from now, will sell for more than $2 million. Yeah, but I'm saying, will they get a price like that in a year? From now, it won't be $1.8.

It'll be $2.1. Yeah. It's not going to go down. But it's not, there may not be, it may not be as easy to sell it. All that. This is The ramsey show Rachel Cruz, Ramsey personality, number one bestselling author, my co-host today. Jared is with us. Jared's in Midland, Michigan. Hi, Jared.

How are you? Good, sir. How are you? Better than I deserve. What's up? So me and my fiance are getting married here soon in July. And she just graduated college with a nursing degree. And I've got a house that I bought before we met.

I also have a new truck and she has a new car. So we together, we have about 330,000 in debt. Um, and we both just started jobs where we're making decent money. Um, we gross about 90,000 a year. And I guess we were just kind of wondering, um, you know, coming up on our wedding and hopefully having kids here shortly in the next year or two, how we can kind of prepare for a solid foundation financially. Yeah, well, congratulations on the engagement and the wedding coming up. So out of the $330,000 of debt, what's in the cars and what's in the student loans? So my house, I owe about $100,000 on. Her student loans are about $170. My truck's $33,000.

Her car's $12,000. So. Okay. Holy crap. Okay. Yeah. How old are you guys? I'm 25. She's 26. Okay. Yeah. How old are you guys? I'm 25.

She's 26. Okay. So when you add that up, does it kind of scare the crud out of you? Oh, absolutely. What about her? Oh, yeah. Probably her more than me. Good.

Okay. Because I don't want you to be debilitated by fear, but I want you to be afraid enough to do something about it. So that's good. Okay. Is she in the nursing position you think she's going to be in long-term, or is this just like a stepping stone because of her degree? I think she'll stay there.

I think she enjoys the work that she does. What's she making? She makes about $59,000 a year. And you make $30,000? No, net. She makes like $59,000 a year. And you make $30,000? No, net. She makes like $59,000. Take-home probably like $41,000-ish. I make take-home like $48,000.

Okay. I thought you said $90,000 gross. Yeah. Yeah, she makes like $41,000. I make like $48,000. Gross? So $90,000 net. No, you meant $90,000 gross. That's what you meant, your take-home pay. Take-home $41,000. I make like $48,000. Gross. So 90 net. 90.

You meant 90. Gross. That's what you mean, your take-home pay. Take-home. Yeah, sorry. Yeah, yeah. 90 net, not 90 gross. So you're making about $130,000, $110,000. Okay, good.

Yeah. All right, good. So, good. And what do you do, Jared? I'm a millwright. Okay, good. Good. All right.

Well, the good news is in both of your cases you probably can pick up some extra hours that are very very profitable hours ot and both of these things pays very well we don't want to do that long term and we don't want to do it too much in your first year of marriage but uh we want to do it strategically to be able to execute to be able to get rid of these debts i'm not worried about the house the student loan is a serious mountain the truck's probably under the heading of sold okay because you guys got to clean this mess up the faster you're out of debt everything but the house the faster you're going to have amazing peace in this household because you're you know you're going to be making over a hundred thousand dollars a year with no payments

but a hundred thousand dollar house payment yet that's a really good place to be in at 25 years old it's not gonna be 25 it's gonna be 27 it's gonna take you two years to clean this up or more uh but the 170 is a big number and so what i always look at mathematically that gives me uh great hope is the size of the shovel you have, your income, household income, versus the size of the hole you're in. And so you're in a really big hole, but you've got a good shovel. And so I'm not panicking looking at the math, okay? But I do know you guys got two to three years of beans and rice no life ahead of you to clean

this mess up and i personally wouldn't try to ride a 33 000 truck through that i'd ride a an eight thousand dollar truck through that okay how much do you can sell it for jared do you know um probably 40 42 yeah they give you enough to buy another car for cash and get rid of the truck payment that's 700 bucks a month right that would be huge that would be huge sure yeah that moves the needle and then you're then you list your debts smallest to largest that would just leave her car and the student loans and we begin to attack them get her car knocked out and then we begin to attack these student loans with a vengeance and don't go into debt for the wedding jared don't continue to dig in that hole no our parents are uh oh awesome

pretty much cash flow on the way that's great that's great that's awesome um so she has an option to consolidate her student loans which would drop her it'd go from a i think a 30 year to a 15 year but it would take it from like a $2,000 monthly payment to a $1,500 monthly payment. Doesn't matter. Do you think that's wise? Doesn't matter. What I'm concerned about here is the interest rate. What's it do to the interest rate? 10% to 4%. 10% to 4%. Yeah, the lower interest rate is excellent. 15 years doesn't matter because you're going to pay them off in three years. You're going to be 100% debt-free in three years you're going to be 100 debt free in three years okay well so the other thing i was thinking um her if she makes her minimum payment on our student loans for 10 years her work will pay it off is it we're not doing that absolutely not

nope okay no her work won't pay it off you're talking about the federal government paying it off and they have not been doing that there's a 97 percent turndown rate on that plan it is a failure okay so no we don't we don't we don't let somebody else clean up your deal you guys got to go clean this mess up and here's the thing a little bit of ot on both of you we can kick this thing without you without you completely giving up your your newlywed year okay but you can kick your income up another 50 grand pretty easy and that's's where I'm getting these numbers, okay? And so between the two of you. And just strategically pick some ER work on the weekends for her or something like that.

You pick up just some straight old OT. I'm sure it's available to you right now because everything's gearing back up. No pun intended in your case. But the, you know, you guys are in you got great careers because you got a lot of opportunity here to clean the mess up and so but here's the thing there's a direct correlation by how intensely you attack this and how fast you get out number one and if you get out at all number two the probability of completing it is tied to your intensity and the speed at which you complete it being debt free. It is tied to your intensity.

So I want you guys to sit down, have a very detailed plan and attack this. We're going to help you. We're going to give you Financial Peace University as a wedding gift. OK, free. Oh, thank you. And the two. That's awesome. help you we're going to give you financial peace university as a wedding gift okay free oh thank you and the two that's awesome yeah the two of you go through that and um that's good pre-marriage counseling it's going to teach you to work together as a team to accomplish a goal it's going to be great for your relationship anyway but it's also going to normalize this process

because what you're getting ready to do none of your friends are going to be doing they think you're going to think you joined a cult. Sure. I mean, you sold your truck and you lost your mind. You know, that kind of stuff. And let me tell you, Jared, you guys together, just to speak even more on that sacrifice, this is the time to do it. As newlyweds, before kids, if you have the bandwidth to do it, do it. Do it now because you're going to fast forward in four years and you're going to have a baby on the way you guys are going to have no payments and the the

the level of peace that you will have so much more doing it now versus waiting it out because i mean we talked to so many people that are getting on debt and they have the kid and they have kids and they're doing it and it's absolutely can be done but god they look back like why didn't we start this sooner so the sooner you guys can do this the more intense you can do it and shake hands and say, okay, we're in it. We are in it. And we're going to complain together. We're going to be in it together.

We're going to celebrate together. We're going to be tired. We're going to be tired together. But like, this is our journey. And two, what it will do for your marriage, you guys working on the same team with a huge goal like this and to accomplish that your first couple of years of marriage is it will do so much for you guys. I mean, it will, it it will it will unite you guys in a whole other way versus if you kind of just were like and we're okay with it it's fine and just go through life so there's

there's a lot of pros here you guys have you said you're 25 right yes sir okay so when you're 30 here's what's going to look like if you do this. You're going to be making, without overtime, $150,000 to $170,000 a year. You're going to have no payments except a little bit of a house payment left. And you may even have it paid off. And you're going to have $40,000 or $50,000 in the bank. And you're going to have learned to work together. You're going to go on great vacations. You're going to be on your way.

You're going to be driving that truck together. You're going to go on great vacations. You're going to be on your way. You're going to be driving that truck again, Jared. Yeah, exactly. You're going to be on your way to being a millionaire in no time. That's what five years from now looks like. But you've got some hills to climb between now and then. Hold on. We'll have Austin pick up, get you guys signed up for our gift of Financialas University. Our scripture of the day, Proverbs 4.26, Watch the path of your feet, and all your ways will be established.

Dolly Parton said, If you don't like the road you're walking, start paving another one. Love it. Way to go, Ms. Dolly. Liz is with us. Liz is in Palm Springs. Hi, Liz. Welcome to the Ramsey Show. Hi, thank you so much for taking my call. Sure, what's up? So, I'm graduating college with my bachelor's in psych, I'm 23, and I'm graduating this Saturday, and I'm kind of wondering what you think I should do in terms of I don't like my home situation,

I really, really want to move out, but I'm $13,000 in debt. So I'm not sure if I should tackle my debt first before moving out or if I should get an apartment first. Do you have a job lined up? I'm looking for jobs. I have one that's lined up, but the pay is only $20 an hour. Okay. How much would you be working? I'd be working 40 hours a week.

40 hours. Yeah. Well, I think it's just $13,000 in student loans? Or it's $10,000 in student loans and $3,000 in credit card debt. Okay, okay. Yeah, I mean, I still think to be able to be out on your own, Or it's $10,000 in student loans and $3,000 in credit card debt. Okay. Okay. Yeah. I mean, I still think to be able to be out on your own for sure is a possibility. I mean, I would be looking at your job.

You need to look at your budget and figure out, okay, how much is going to be your take-home pay. You want to make sure you rent somewhere that's no more than 25% of your take-home pay. But I would not go buy a house. I would go rent an apartment. But I think it's totally feasible, yes, for you to get out. What's the situation? What makes you want to leave? So we moved in with my brother.

Just stuff happened. We moved in with my brother. But the thing is that he's always bringing home girls. He's very kind of verbally abusive to me and my mom is as well so I really want to move out and but the problem is that if I were to find an apartment it wouldn't be 25 percent um just because like rent around here and even in cities around is like 1,500 for like one person so. So I'm kind of just stuck. I don't want to get an apartment I can't afford,

but then I don't want to work like two jobs. And I mean, if I have to, I will, but I just feel like I can't afford it. You have to. Until you get a better job, you're going to be working two or three jobs. Right, yeah. You're broke.

And $20 an hour doesn't cut it in palm springs no that's what you're saying and i don't disagree with you so you may be moving to a different city too i mean palm springs is not exactly cheapville no this is like one of the most expensive areas in the united states yeah it's not designed for people it's not the the the economics there are not designed for people to make 20 bucks an hour right yeah so here's the question so there's a couple of variables here all right location the city you live in is a variable uh your income what you make per hour is a variable.

You found one job at $20. Let's go find one at $40. Let's go find one for $40. Let's use your degree. Use your psych degree. Get into some marketing. Get into something. Use that psych degree where it has value,

where you understand human nature and you're plugging in. And the other variable is the amount of hours you work. And so it probably is that for the next three years, you're going to work a lot more than 40 hours, and there's a possibility you're doing that in a different city, and there's a possibility, a strong possibility, you need to look for a better job because you haven't found the best one yet. You can make $20 an hour stocking shelves at freaking Target.

So you haven't found the best job yet. Okay. Agreed? Yeah, I agree. Yeah. So all of that combined sets you free from a toxic situation. Mm-hmm. Hours worked, better pay per hour, and a possible geography change to an area that's more affordable

the combination of those three variables however you dial them in uh puts you out in the wild wild west kiddo you're out here in the big big girl world now but you're out of the toxic mess the sewage that is your family right yeah and you need to be free from that don't you yeah and it's worth 80 hours a week work for two years to get free from it right yeah i agree yeah yeah that's what the tears are you need some freedom but it's scary isn't it yeah yeah but here's the thing you needing this freedom does not mean a fifteen hundred dollar apartment works on a twenty dollar an hour forty hour week it doesn't that math doesn't work that's you're trading for one kind of stress for a new kind of stress if you do that.

And the change is going to be hard, Liz. All of that, right? The work that's going to go in that you may not have wanted or thought about and realizing that's your reality. Maybe getting working jobs that are not your favorites and moving to maybe a new city, the location piece of that. So these are all big changes. But they're possible, Liz, and you can do this. You can do it.

You're getting ready to be the most courageous you have ever been in your life. You're getting ready to have a whole new level of courage right now that you have never had before. Do you have good people in your life, Liz? Are you part of a good church, or do you have good mentors or friends? Yeah, I have. people in your life liz are you part of a good church or do you have good mentors or friends um yeah i have um i just recently made um i reconnected with my best friend so and she's been a really good support system for me yeah that's awesome i would get some good people around you um to i don't want you walking this alone right because this could be a very lonely thing um so here's the pain if i was thing. So here's the pain. If I was in your shoes, here's the pain I would choose. I would choose to take a sucky job that I hate that makes $50 an

hour, as long as it's moral and it's legal. Okay? All right? Yeah. And because you're not going to do it long, it's your escape mechanism. You're going to escape from the little bit of debt and escape from that house and get out there and be able to pay your light bill and put food in the refrigerator but you're going to hate what you're doing for a little while and then your next step is to find something that makes fifty dollars an hour that you love okay but you're you're going to be making some courageous uh high levels of change the anxiety associated with change you're getting ready to swallow a whole bunch of that i mean it how old are you liz we were at universal the other day and we got on this

roller coaster and it went straight up click click click click i mean straight up we were on our backs click click click click click click click click click click click click and we know what's at the end of that right as soon as that thing gets to the top we're getting ready to drop off a 15-story building it was a blast that's what you're doing right now click click click click click click click you're getting ready to go off Get ready, kiddo. Here it comes. I hope so. No, it is. It is. Yeah.

Because it's time. You need it. You need it. You need to do the brave, wild, crazy things that it takes to set you free, don't you? Yeah. But don't do this. Listen, you've got a degree in psychology. Don't do this while in denial about the mathematics. Okay.

Look at the math. The math is your reality. It's saying I have to do something different, and I have to work a lot more, and I may have to live somewhere else. What's the scariest part, Liz? What's still the, like, you're gasping. What's the scariest part, Liz? What's the, what's still the, like, you're gasping. What's the, what's the scariest part for you? Well, I'm just not sure if I should be paying off my debt first.

No, no, no. You need to get out and get a job and get an apartment that you can afford. Okay. And then you're going to save up a thousand dollar emergency fund. That's going to be your next goal. And Austin will pick up. We're going to give you a year-long membership to Ramsey Plus because that has every dollar, the premium budgeting app.

I want you on a budget, Liz. And you know exactly, once you get your job, you know exactly where your money is going. And your goal is those four walls, your food, your shelter, utilities, transportation. And then your next savings goal is a $1,000 emergency fund. And then after that, you can look at your debt. But you're going to clean this debt up.

You don't have a ton right now. You're going to be okay. It's $13,000. Your debt's not your problem. Cut up your credit cards, too, Liz. Cut up your credit cards. You're braver than you think you are, kiddo. You can do it.

You're going to do it. Woo-hoo! This is the Ramsey Show. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. Hey, it's Rachel Cruz, co-host on The Ramsey Show. If you want to do your debt-free scream live on the show,

visit ramsesolutions.com slash debtfreescream. We'd love for you to come to Nashville and tell Dave your story. debt-free scream live on the show, visit ramsaysolutions.com slash debt-free scream. We'd love for you to come to Nashville and tell Dave your story. That's ramsaysolutions.com slash debt-free scream.