The Ramsey Show - App - What’s the Best Way To Buy My First Home? (Hour 1)

Episode Date: February 1, 2023

Dave Ramsey & Rachel Cruze answer your questions and discuss:   The best way to buy your first home. from the blog: Tips for First-Time Home Buyers, How Ramsey investing principles apply in foreign countries, "Should I ride out a 529 in this down market?", When it's ok to dip into the emergency fund, from the blog: 3 Questions to Ask Before You Use Your Emergency Fund, What to do with extra money in the bank. Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET 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 Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

Live from the headquarters of Ramsey Solutions, broadcasting from the pods moving in storage studios, it's The Ramsey Show. This is where we help people build wealth, do work that they love, and create actual amazing relationships. Rachel Cruz, number one best-selling author, Ramsey personality. My daughter is my co-host today.

As we take your questions about your life and your money, the phone number, 888-825-5225. The call is free and some say the advice is worth exactly what you pay for it. Dan starts off this hour in Tampa. Hi, Dan. Welcome to the ramsey show hey dave how you doing today better than i deserve what's up hey um thanks for taking my call rachel nice to hear from you as well um wanted to give a call today my wife and i um we got married last year and um recently we've saved up enough money to purchase our first home.

Currently we have saved more than 5% and even 20% down for a home. So my biggest question today is, is it a good idea to start and maybe do 5% or 10% to start as the world is in a very interesting place? And also, is it still a good time to buy a house? I know that you mentioned back in June or July that then was the good time to buy a house? I know that you mentioned back in June or July that then was the best time to buy a house. And so I want to make sure I'm a good husband and a good steward of my money

and would just love some feedback and wisdom on that. Dan, you're such a good guy. Just so mature. I just appreciate the thoughtfulness already. You know, when it comes to buying a home overall, kind of the principle that I always say is to make sure that you're the one that's ready to buy the home. And it's not necessarily what the market is doing, right? It could be a great market and you could be broke and it would be devastating for you. Or it could not be a great market, but you financially have the money that you're able to jump in and you're like you know why not let's just do it right so like there's where you are

dan financially is the most important thing and so everything that you've laid out so far i'm assuming you have no debts and an emergency fund on top of the down payment is that correct um so with the we do have a five thousand dollar car payment it's like 75 per month with two percent interest so that's the only thing currently how much do you have We do have a $5,000 car payment. It's like $75 per month with about 2% interest. So that's the only thing currently. How much do you have in savings? How much do you have in savings? In savings?

Is that with like my... Everything. We're talking probably over $110. Write a check today and pay off your car. Okay. Okay, now you're debt-free. Because you don't qualify to buy a house until then it under ramsey rules okay because we don't want broke people buying houses because when broke

people buy houses it makes them broker and when you got a car payment you broke people okay so now you're now you don't have a car payment anymore we just got rid of that we need to allocate three to six months of expenses of your money to the side for your rainy day fund. Okay. That's all set. Okay. And then in addition to those two things, the 5,000 and the six months, how much do you have to put down in the house after I took $5,000?

So what, I mean, taking out, say it was 110, we'd be at 105. My biggest question. No, no,

no. How much is it? How much of that's the emergency fund? Oh, the emergency fund's about $30,000. Of that $100,000? Yes. Okay, so now we have $75,000. Yep.

Okay, that's what we've got to work with, $75,000. Great. Now, what's your household income? Household income annually uh before taxes is 180 okay way to go what do y'all do uh i am an account executive for a construction software company and my wife works uh as a customer success manager for a um crm company well you guys are just like a power couple man look. Look at you. Way to go. Good money, good stuff. You're doing smart things.

Way to go. Way to go. So, yeah, then you start looking and saying, yes, I'm going to buy a home. Now, if you think that the world is so topsy-turvy that you need to hoard cash, then you don't need to buy a house. So you need to put $75,000 down on a house, smile, get you a nice house, 15-year fixed where the payment's no more than a fourth of your take-home pay, and if you're not willing to plunk the $75,000 down on that house, don't buy a house.

Okay. Because it tells me that you think the world's too crazy to be a homeowner. Well, and the interest rates are higher, right, Dan? And that's what a lot of people are looking at as they're either first-time homebuyers or buying, and so like, oh my gosh interest rates but here's the deal you can refinance when the rates drop which they will eventually they're not going to stay this high forever so you can always refinance yeah so put the 75 down right marry the home right exactly exactly so my question is on that is um to be completely frank, we're in our due diligence period.

We've put an offer in on a house, been accepted, we've negotiated. It is in Georgia. Tampa has been a great time, but it's just been very, very expensive, and just due to community as well. But I'm necessarily not scared of the market, but I have people in my family that are very skeptical and thinking that i'm making a larger mistake and i don't want you know well that's sweet but they don't get a vote yeah yeah that's called being like a grown-up and married you make your own decision stuff yeah i mean it's sweet that people have an opinion about your life. They love you. And how old are you, Dan? How old are you?

I'm 24. Okay. So listen, Dan, this could be like, kind of like Dave is saying, I'll say it in a nicer way, that your first decision that you're going to make that people in your life are like, ooh, that you're not being wise. So automatically, Dan, yeah, 24, you haven't had the life experience in the years and the muscle built to be able to stand really securely to say, no, no, no, I've done the math. This is what we believe. And we're going to go forward. Right.

This is the first pushback. So it's going to feel uncomfortable. You're going to question yourself. The first time your parents do question you as an adult, you're thinking, oh, gosh, am I making a bad mistake? Right. So getting wisdom from people and all of that, I think, is great. But what you have to understand is you've done the work, you've run the numbers,

you're working a plan that you believe and that we teach here at Ramsey that millions of people have done and they've been okay and they've won with money. So you're not doing anything crazy or that's somehow gonna sink you financially. So I would say it's gonna feel uncomfortable, but once you go against what

your parents think over and over and have your own opinions over and over it gets easier right why are you looking at me the grown child it gets easier the grown child that had never had any issue voicing her opinion since she was four so there we go okay uh you're gonna be fine dad it may have something to do with your mom i don't want you to move to georgia too it could you know that could come up into it so um and we're going to use the economy as an excuse to keep you around in case you make a grandbaby so um there's all kinds of stuff can weave into these things so what you've got to do is do exercise the muscle of being kind to those who care about you, but don't get a vote. And it's

just like, that's sweet. That's precious. Thank you for your input. And we're going to go do whatever the flip we want to do anyway. So Sharon and I do a pretty good job as parents and in-laws of not voicing our opinion unless we're asked. Now, if you ask, well, now you done opened the door. Kind of like when you call this show, right? But if you don't ask, I just got to stand back and watch you and grin and go, that's going to leave a mark. Which has happened a time or two. No, I mean, it may not leave a mark. Which has happened a time or two. No, I mean, it may not leave a mark. I might be wrong, but we just don't interfere unless we're out.

Matter of fact, we don't do that with anybody, with our friends. I had a friend the other day, he's stupid. He pulled up in my driveway and showed me his new lease car. And I'm like, you know, well, that's nice. It's a nice car. This is The Ramsey personality number one best-selling author is my co-host today as we answer your questions about your life and your money. Hey, we've got an Entree Leadership Theme Hour coming up, and what that means is we'll be answering your small business questions. What's your current pain point with your business? Your team? Managing the finances?

Marketing questions? Oh, there's all kinds of things going on in business these days. It's a complicated little old world out there. So send your questions to ask at Ramsey solutions.com. Entree theme hour, ask at Ramsey solutions.com. February 13th, I have taken over the Entree leadership podcast where I answer your, I, we changed the format. I'm going to be answering your business questions, callers calling in on the podcast. And so if you want to participate in that, just check out the Entree Leadership Podcast. Again, the February 13th version will begin with me answering your questions.

I'm having a blast doing those. And so basically it's a small business theme hour once a week on Entree Podcast with me answering the questions. So in addition to the one we're going to be doing here on the Ramsey Show. So they're everywhere. They're everywhere. So be sure and jump in with us ask if you want to do any question for that matter if you want to just email us in the team will get back to you we'll try to get you on the air here or on entree wherever you need to be on deloney show you

we can get you there man i'm telling you ask at ramsey solutions.com especially for an entree leadership theme hour that's what the big push there is. So thanks for joining us. Natasha's in Canada. Hi, Natasha. Welcome to the Ramsey Show. Hi. Thank you for having me.

Sure. What's up? Well, first off, I want to say thank you for giving a soon-to-be single mom some hope. I thought I was going to be screwed, but now I'm not. So my question is about investing. I'm in Canada, and I'm brand new to this, brand new to your methods. And everything that I've looked at online has everything to do with investing in the States. And I was wondering if it translates to Canada as well.

Well, fairly similarly, as far as the investing part, the principles are common sense and biblical principles. So getting out of debt, that translates anywhere, right? Living on less than you make, that translates anywhere. You've got to do those types of things everywhere, regardless. Now, as far as using the Ramsey Baby Steps, as you said, you can find out about those online, a lot of different ways to get that, and there's seven baby steps, you know, as you said, you can find out about those online, a lot of different ways to get that. And there's seven baby steps and walking up through the majority of those will work anywhere until you get to the investing part. And then you've got to use, you know, we're talking about in the States, 401ks and Roth IRAs, which doesn't apply in, you know,

in England, in Australia, we've got a lot of listeners there. And certainly in Canada, we've got a ton of listeners and viewers. So anyway, to answer your question, once you get there, you know, baby step one is $1,000. Two is your emergency fund. Three is be debt-free except your home. Three is a fully funded emergency fund of three to six months of expenses. Baby step four is 15% of your income going into retirement. Five is start saving for kids college. Six would be pay off your home early. Those would stay in place. Then how you would do 15% of your income into retirement.

You've got a Canadian retirement program, correct? Yes, but sorry, I guess I should clarify the questions more. So finding me who to invest with, like, I know if I go I should clarify. The question is more so finding who to invest with. Like I know if I go to my bank, it's different than going because you have your SmartVestor Pros. Right. But I can't find any SmartVestor Pros in Canada because that's put in the zip code. Yeah, there's not any. Because of regulations, Canadian regs are completely different than America. So we're not able to do an endorsement of stock brokers, so to speak, investment advisors in Canada. But here's what the principle you would use. You're looking for

someone with the heart of a teacher. Yeah. So Natasha, sitting down with someone in this industry, I would say like any industry in life, you're going to have people that are kind, that are patient, that are willing to help you in your situation, willing to teach you. And you're going to have people that are kind that are patient that are willing to help you in your situation willing to teach you and you're going to feel that sitting down with that type of person or you're going to sit down and feel gross and the person is slimy and you're like i don't have a good feeling about this so trust your guts because they're arrogant yeah so you want to be sitting down and hiring someone who, again, has a heart of a teacher. So it's really feeling the spirit off of them.

And hey, are they willing to walk with me and teach me? And that's the kind of person that you want to work with. Not someone who is intimidating, that you're scared to ask questions. And that just feels gross. You know those kind of people, Natasha. We all have that. You have that gut check where you're like, oh, I don't feel right. Just listen to that. So go. I would interview, ask around even for, you know, your friends and family and just say, hey, do you guys use things to you, and then choose someone. Because I would. I would really recommend, yeah, having someone on your side who does this day in and day out. I think that's really, really important.

But the big mistake with things that are intimidating or that we don't understand is to just turn it over to someone blindly and say, well, I've got me a guy. And this is how people lose all their money. All right. And so, uh, you're responsible for your money, not the guy he's responsible to teach you or gal,

he or she is responsible to teach you so you can make decisions. If they do not have the heart of a teacher, they will instead have the heart of a salesman and there'll be a level of arrogance. There'll be a transactional feel rather than a relational feel to the meeting to rachel's point and uh you run out of there and you get your different one natasha are you at that point for investing do you have any your debt savings i will be within the next few months um we're looking at like i'm looking at moving moving out within about five months kind of thing.

And at that point, I should be able to organize everything so that I can start off definitely. And are you, because at the beginning of the call you said you were a single mom, is that a more recent thing in your life? It's going to be, yes. It will be. I told my common law partner of 13 years at Christmas, or just after Christmas that I was done trying to fight, and at the end of the kid's school year that we were going to go, I said, don't wait. Wow, Natasha, I'm so sorry.

And you know what, Natasha? It would be okay to pause. You know, don't make a huge financial decision in the midst of this grief. Cleaning up your debt will give you stability. You don't need to pause that. But pausing the investing decisions. Yeah, don't feel like you have to rush into that really part of recovering from a relationship uh split up is to get your confidence back i'm working on that now yeah and so make sure you got that back because that melds into the advice we just gave you because um you know i like a few years ago, I had this lawyer that was working for me as a lawyer, not on my staff, but decided he was going to tell me how we were going to do stuff.

And I went, no, man, you're confused. I write you checks. I tell you stuff. You don't tell me stuff. Arrogant twerp and so i had plenty of confidence to run him off because he decided he was going to be you know i'm supposed to do what he says because he's got a law degree which means absolutely nothing and so i do want to learn from him about the law and about the situation and then i'll make the decision but you're not going to dictate to me because i'm confident in that

and you need to be in that kind of a position, not arrogant, but confident that, you know, confidence in yourself. And I trust my own instincts and I'm going to learn from this person. And then I'll make the decision based on the knowledge transfer. And that's their job. And if they can't do their job, you need a different one. Yeah, for sure. So yeah, Natasha, I would pay off the debt, get some savings in place.

And again, one year of not investing or six months, you're fine. I would really just be patient with it because you're going through. I mean, there's going to be a lot that you're about to walk through. And it's really hard, really, really hard. After 13 years, and if you guys have kids together, I mean, it's just hard. Yeah, it's a lot that you're about to walk through and it's really hard really really after 13 years and if you guys have kids together I mean it's just um hard it's a yeah it's a lot so don't feel like you have to rush into something like investing but I am kudos to you though that you're researching and figuring out a plan and you know getting to this point that you're like okay I'm gonna be doing this so um so that that's that's amazing if you're a new listener a new viewer

like she is hey listen if you go to ramseySolutions.com, you can click the Get Started button. Get Started button. And it'll help you get to the next step in your financial journey. It'll show you what those baby steps are we're talking about. Some of this lingo we throw around here on the show is all over the place. It's kind of inside baseball almost. So you can start to learn the lingo of the stuff we're talking about. The get started button. It's completely free. It's an assessment that'll tell you where you are and then what your next steps are. And we'll help you. We're going to

walk with you. It's what we do. Completely free. RamseySolutions.com. Click the get started button. And if you're right where she is, then you'll get to move on to the next step or be prepared to move to the next step this is the ramsey show Rachel Cruz Ramsey personality is my co-host today, number one best-selling author. Paul is with us. Paul's in Washington, D.C. Hey, Paul, welcome to The Ramsey Show. Hey, Dave, thanks for taking my call. Sure, what's up?

I have a question. I've been saving for college expenses with a 529, and now I'm in a position where I'm ready to use it. My daughter's in college, but it's losing value. It's been losing value based on the last year. And I'm wondering if I should kind of ride this out before withdrawing from five 29 or how would you pay for it? I'm sorry. How would you pay for college?

So I'm in a fortunate position that I could actually pay. So I have my emergency fund that I could pay the cash and then kind of ride it out to see how the year plays out. An emergency fund? Yeah, so I have savings, you know. Well, I mean, there's a difference in savings and emergency fund. Your emergency fund is three to six months of expenses. Anything beyond that is just liquid cash.

We could use that, but I'm not touching your actual emergency fund. Okay. Not an emergency. Not an emergency. You've got some extra cash beyond your emergency fund, I think. Yes, that is correct. You're sitting on a pile of money. How much money is in this pile? I wouldn't say it's on a pile of money. How much money is in this pile?

I wouldn't say it's a pile, but yeah. How much money? How much? $60,000. $60,000. Okay. How much of that is your emergency fund? $42,000.

Okay. So we got $18,000 we can play and give the market a little bit of time to heal. Yep. So that's probably market a little bit of time to heal. Yep. So that's probably not a whole year of college. How much is a semester, Paul? A semester is running, I'm fortunate that I have grants. So it's around $9,000 a semester. Okay.

So that'd be two semesters of tuition only. Is she living at home? No. Okay. Then it's one semester of money 18 000 is going to be gone in one semester right am i missing something with 9 000 of living expenses you think well i mean it you don't have enough to make it two semesters yeah yeah whatever it is so going to, you know, after you get to delay touching your 529, $18,000 worth, whatever that is, right? So yes, I would do that. But no, I would not touch your emergency fund. No, I would not take out a student loan to time the market. Gotcha.

How much is in the 529? The 529 has $58,000 in it. $58,000? And how are you paying for the rest of school? Yep, that's what I'm working on. I mean, I'm just saving for it. Okay. What's your household income, sir?

It's about $210,000 a year. Okay, you'll make it. You're going to make it. You'll be okay. Yeah. And if you've got $58,000 in the you'll be okay yeah so and if you if you got 58,000 in the 529 that means in actual cash you did not lose much because the market's not down but about 10 right so i mean you lost like five grand or something it's not like

i know i'm kind of tempted i mean i would be curious what you'd say just to go ahead and you i mean the 529 is there why would you I don't mind waiting $18,000 worth, though, and let the market heal. You would? Just take all his cash that... Down to an emergency fund? Sure. Sure. He's going to use it anyway.

Eventually, but between now... 58 plus 18's not enough to go to college. I know. But I'm just thinking between now and 12 months, if he needs that cash to replace a car or you know what I mean? They're doing other stuff. Well, then you're not going to have it for college. I mean, that money's going to college. His his kids going to school so yeah that money's gone

it's earmarked you just hadn't realized it until this conversation right right right uh you don't get to buy a car if your kid's going to college you're going to be driving that car because you're going to need that money 18 plus 58 i know plus cash flow and the rest of his income is barely you can do it but there's no squeeze room here yeah so you're doing a good job let me tell you paul you are like 98 ahead of everybody that's right because most people talk about stuff and do nothing and you have done something you have saved money you have a 529 lots of good positive things going on there. Very, very, very well done. Very well done. I'm proud of you.

So good stuff. Thanks for letting us work through that with you. By the way, folks, the Biden administration has signed the SECURE Act 2.0, two issues in there that are pretty cool about student loans. If you have an overfunded, not Paul's problem, an overfunded 529 and you don't use it all for school 15 years later you're now allowed to roll it to a roth ira with no penalties and so uh if the kid could not the parent because it's not in the parent's name it's in the kid's name so if his daughter had 158 000 in that 529 and there's 40,000 left over after she graduates, used to be kind of stuck in there.

Now they're going to allow you after 15 years, she can roll it. That's a really nice feature that the Biden administration and the Congress got through. I make fun of both of them ad infinitum, but I'll tip my hat to both of them. I don't know who came up with the idea, but Biden signed it. So we'll give everybody a little credit up there. That was actually good work to encourage that. The second thing is now employers can put up to $3,000 into your 401k matching your student loan payments so if you pay down through your student loans by three thousand dollars your employer now can add a benefit to their benefits package and put up to three thousand

dollars into your 401k now that three thousand dollars not going to change your life that's more every yearly every year annually once a year yeah but we're not going to wait around and do this and we're not going to uh keep the student loan in order to get that oh geez that's the problem with stuff like this this all the unintended consequences but just some sidebar with what paul's talking about there so good job paul well done proud of you my man andrew's in atlanta what's up andrew hey dave uh thanks for taking my call yeah so my wife and i we recently bought a house last year um we're currently on baby step six already so we're feeling really good about that. Um, you helped us get, get here, which is great.

Um, but we've, we've kind of had some, as, as what happens when you buy in your house, we have lots of maintenance for things that have come up. Um, unfortunately they weren't really covered in the original purchasing agreement. So we kind of have to pay it out of pocket. And, um, we're at the point where we're having to start dipping into our emergency fund or delaying some of the repairs in in this case, a leaking roof. And I know that my wife's really hesitant about ever dipping into our emergency fund. So I'd love to kind of like your wife, your input.

I'd love to get your input on like, you know, when is it OK to kind of dip into that emergency fund? If it means that, you know, we can kind of fix the leaks right now. We have a tarp on the roof and I know know she just it's her last resort you know uh how much is in the emergency fund about thirty six thousand dollars thirty six how much would the roof be uh the roof would be about um ten thousand dollars but we have about four thousand dollars set aside to cover that we've been able to kind of put together in the last month or so so you would take six out of the emergency fund that's correct and that would be worst case we're getting other um your household income is what about 250 000 a year and so you could pay for the roof next month um we could but we also have like the mortgage payment and that

would kind of i I guess we could. We totally could. So one of the other things – Dude, you make $20,000 a month. One of the things that we do is we kind of have the next couple months planned out ahead of expenses. I'm sorry. Your plan changed. Your roof leaked.

Right. And that's kind of where I'm at. And I know that, like, you know, we kind of have these money set aside for this purpose, and, you know don't really want to touch it but at some point like you know that's what that money's for no no not if you can cash flow it um okay you know it's an emergency if you can't cover it any other way and so because here's the thing okay let's say you did the roof this month four and six out of the emergency fund you know what you got to do in the next two months go out to you put the emergency fund back right so it's kind of like you got to do it next month anyway so it's just swapping dollars from the right pocket to the left pocket because it's just

such a short time frame you're either going to put the money back in the emergency fund next month or you're going to do the roof next month still your little plan that you had laid out screwed because the roof leaked either way right yeah yeah sorry i mean i'm sorry your roof leaked i really am i've been through that it's no fun so i i you know it doesn't matter to me whenever you can get the best deal and get the roofer lined up and get everything done. And make sure the leak isn't causing other damage. I mean, this may be more urgent. We've got a tarp on it. I mean, that makes the HOA happy because everybody just loves the blue tarp look.

It makes everybody. The neighborhood's going up. I mean, we've got the blue tarps in the neighborhood now. Trying to stay out of the emergency fund, Dave. This neighborhood's happy. Trying to stay out of the emergency fund. $250,000 a year and I've got a blue tarp. This is The Ramsey Show. Well, Valentine's Day is coming.

Valentine's Day. You know, Winston and I do. We celebrate on the 13th because that's when we got engaged. And we skip all the hysteria of the 14th. Well, you can get a restroom reservation, too. I know, and it's not like a set menu and all that. Yeah, you get around it. But I know a lot of people out there, you guys celebrate Valentine's Day,

you know, the holiday of love. And it's more important than ever to focus on your relationships, the relationships in your life, specifically if you're married. So when it comes to Valentine's Day, we are all about deepening your relationships. And we have a great way to do that with Questions for Humans, which is a conversation card by Dr. John Deloney. So this is for parents and kids. This is for humans, which is a conversation card by Dr. John Deloney. So this is for parents and kids. This is for couples, the workplace, friends, or the dating scene.

So every question will have you laughing together, learning something unexpected, and building deeper and stronger relationships. So don't just get chocolate and a card and all the stereotypical stuff. Get something that you actually will learn about the people in your life that you actually will learn about the people in your life that you love so make sure to check out questions for humans at ramseysolutions.com

slash humans now the first two and a half weeks of february at our house my wife sharon it's sharon pelusa that's right because our first date was february 6th her birthday's the 8th and valentine's day's the 14th so it's just like it just keeps the hits they just keep on coming just keep on saying so we just set the side the first two weeks it's all about her February as if it's not all about her to start with but um anyway all right let's go to Travis in Austin Texas hey Travis welcome to the Ramsey show hi Mr. Ramsey how are you you? Better than I deserve, sir. What's up? So, over the course of the last five years, I've really kind of gotten my financial house in order.

And I've put together what I feel is, you know, a pretty good amount of money. And I've been a longtime listener. I'm a first-time caller. And I haven't paid off my house. How much money? What was house. How much money? What was that? How much money? My total net worth is probably about $850,000. You said I put together a pretty good amount of money. How much of that $850,000 is money?

$550,000 to $600,000. Okay. And how much of that's in retirement? $260,000. Okay. You got $300,000 or $400,000 non-retirement laying around. You owe what on your house? $235,000. Okay.

So you got the cash to pay it off without touching retirement. Did I get that right? Yes, sir. Okay. So what's your question? Well, I'm in the middle of, I'm thinking about moving away from my house and getting another house because of, I want my kids in a different school. And so, you know, do I go pay off this house, rent it out, buy another one because I have the cash to do both. And I'm just kind of paralyzed because I grew up poor, so cash is kind of king, right? You have it in the bank and it looks really nice, but it's not really doing anything for

me. Good point. And it's a scary thing to go from, not house broke, but all of a sudden all your money is in the house. Illiquid. Yeah, illiquid. You can't get to it. Exactly, yes.

There's some comfort from being able to lay your hands on it. I don't disagree with that. I understand that. So here's the thing. You're going to move. Yes. Okay. We're going to pay cash for that house.

Can we agree with that much? For the house that I'm going to move into? Yeah, you want your home paid for, yeah. Enough of this, okay? So your home's paid for now. Now then, the only question is the rest of the money, do we want it tied up in a rental property or do we want to put it in mutual funds?

Yes, sir. Which one? Rental property or mutual funds? I would tie it up in rental property. But you can't get to it as easy as you can in a mutual fund. Yes, sir. I think because of my job situation, I'm not as concerned about needing it immediately. That's a different conversation.

Who's the guy I was talking to a few minutes ago? Well, I think you can understand this. It feels good when you can look at your phone you know how much money's in your bank i don't disagree with you that's why i'm asking these questions i'm just helping you walk through it so if i'm in your shoes i'm paying cash for my personal residence and then the extra money is either going to be invested in real estate that's paid for with no mortgage or it's going to be invested in mutual funds this is what we teach you know that you've been listening to us yes sir travis i know you said you want to move either one's okay yeah and you want to move houses because you want a better school system for

your kids is that right yes yes so are you so with that when you're looking at the new area that you're moving to is all of this does that sound reasonable to sell the house you're looking at the new area that you're moving to is all of this does that sound reasonable to sell the house you're in take the cash you have and buy a house yeah no um so because of where i'm at i'm outside of austin and the real estate market here has just been great for forever i i you know i owe 235 on my house i could probably sell my house because I've renovated it for $500,000 or more. And so it's like, well, if I pay off that, I can rent that out, and I can apply that to a new house, bill for the conventional loan, and then put the money from that into the new house.

Nope. Nope. No? Nope. Listen, if your new home was paid for and you didn't own any rental property would you go borrow a mortgage on it to buy a rental property no no same thing taking out a mortgage to keep from getting rid of the one that's paid for right nope and travis you're playing you're playing the the math game and i hear that right

we hear this all the time i could do this and that and swap that and that but but what you're wanting and especially what you said a few minutes ago about how i grew up and i just want cash in the bank you want this level of security travis and i'm telling you when you have no debt when you have no debt on your home and there is no payments in the world, that freedom, that autonomy, that level of relaxing in your spirit is something that you're looking for. And I think that that's going to give you a deeper level of satisfaction than trying to play this rental property game of taking a mortgage, keeping this house, getting a mortgage on the new. I mean, you're shuffling around, which mathematically, again, this is what the financial world, we hear this all the time, and I get it, right? You look at it on paper,

but what you're missing is this underlying piece of having deep, deep peace when it comes to your money, and I think you're going to feel a level of freedom when you have no payments that you're going to make different decisions, better decisions. I think I messed up the numbers early in the conversation there, Travis. I thought I understood you could pay for both houses in cash, and I don't think you can. Is that what you're telling me? Not with my wife, I can't. Not the house that she wants, no.

Oh, that's what I meant. Okay. So that means the house that you're living in is going to be sold. Okay. Yes, sir. And I took that out of the conversation. Okay. I misunderstood.

But you don't get the option of the real estate versus mutual fund. You're selling the house that you're in. You're going to pay cash with the proceeds from that house and the cash you have in the bank for the new house. And what Rachel's saying then is going to kick in because the borrower is slave to the lender. And when you are free of masters in your life, and the only master in your life is Jesus, then you don't have the stress. You don't have the, and hey, dude, you make a lot of money and you've done really good you're really smart and so what'll happen is without a payment in the world you're going to pile up money so fast

that you're going to have great investments going again and maybe even go pay cash for a rental later but for now let's get into the personal residence that sets your family up you've worked hard for that pay cash for it by selling the other house and combining the free non-retirement cash with that to get there and you can do that and then let's use that increased cash flow and increased peace at home with your wife your kid is in the school system. What a great dad. And what a great provider. You're just manning up in a culture that's completely forgotten how to do that. So proud of you. So good, good man. And that's the route you go. And then without a house payment and with your income, you're going to have another million dollars so fast, it's going to be blinding to you.

You're going to look back and go, I can't believe I was worried about that. Because that's the way it's going to go down. Really, it's the way it's going to go down. Great job, Travis. Way to go, Travis. But please go that route. Don't try to do too many things at once.

Let's take it a step at a time. Step at a time. Be the tortoise, don't be the hare. This is the Ramsey Shack. Hey, it's Rachel Cruz. If you like what you heard in this episode and want to know more about getting started on the Ramsey baby steps, go to ramsesolutions.com

and click the get started button. We'll help you figure out the best next step for you based on your specific situation. That's ramsesolutions.com and click get started.