The Ramsey Show - App - Where Do Bills in Collections Go in the Debt Snowball? (Hour 3)

Episode Date: March 9, 2023

Dave Ramsey & Kristina Ellis answer your questions and discuss: "How do we roll over an old 401(k)?" "Where to debts in collections go in the debt snowball?" from the blog: How to Pay Off Collections, "Should I let my son move back home?" "What's the best way for me to buy a home?" Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Want a plan for your money? Take our FREE 3 minute assessment: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

Live from the headquarters of Ramsey Solutions, broadcasting from the pods of Moving and Storage Studios, it's The Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships. Christina Ellis, Ramsey personality, number one bestselling author, is my co-host today. Thank you for joining us, America. Tracy starts this hour in Ocala, Florida. Hi, Tracy.

How are you? Fine, sir. Thank you. Good. How can we help? I was wondering if you could advise me the best thing to do. We have a 401k that we need to roll over from my husband's previous job and we were wondering if you could advise us the best thing to you know

what to roll it over into and should we honestly consider getting a financial advisor to help this grow because we're very concerned you know for our retirement sure because i'm 57 my husband's 53 um we do have a house that's going to be still in debt, you know. So we were wondering what's the best thing to do with this rollover check, and, you know, should we honestly consider hiring, you know, a financial advisor or however that goes? Okay. Yes, yes, and yes, and let's walk you through it.

The financial advisor, now you need to keep in mind, I like what you said. You need an advisor. You know what advisors do? They give advice. Then you have to decide to take it. You don't do what they say. You listen to their advice. If you have a friend to give you advice about your kid, you listen to your friend,

and then you decide on your own if you're going to take their advice, right? Yes, sir. And so what we recommend, anytime you're dealing with anybody in the financial world, you're looking for someone with the heart of a teacher, not the heart of a salesman, because a salesman is going to tell you what to do because it's good for them. The heart of a teacher is going to teach you, and then you choose what to do because it's good for you. Okay. You see the difference?

And you can tell the difference at about 20 minutes meeting with somebody. You know what it smells like in the room. When someone's trying to teach you and help you versus trying to sell you, you can feel that, can't you? Yes, sir. Okay. So go to RamseySolutions.com and click on SmartVestor Pros or SmartVestor because you're a smart investor, smart investor. And they'll drop down a list of people we recommend in your area that we have vetted. They will have the heart of a teacher and they will give you advice similar to what we're getting ready to give you right now, Christina and I.

Okay? Okay. Now, what we always tell folks to do and what I have done and anytime you leave an employer, we always tell you to take your 401k, your retirement with you if it's available. The way you take it with you is you do a direct transfer rollover into a new IRA. And we suggest four types of growth stock mutual funds. I put a fourth in each. My personal 401k is in these four types, growth, growth and income,

aggressive growth, and international. Now, the way the direct transfer rollover works is when you meet with a SmartVestor Pro, they'll show you some mutual funds, teach you about them based on you learning. You and your husband will select the four that you want this money to go into. You'll fill out the paperwork. The paperwork is then sent to your husband's old place and they will send the money directly into the IRA.

That's very important because if they send the money to you, they have to withhold 20% on it. And you don't want that. We want the whole 100% to go over into the IRA. And there's zero taxes if you do it the way I'm talking about. But let's say you had $100,000 in there and they sent the money to you, so it's $80,000. You are required by law to put $100,000 into an IRA or you're going to pay taxes on it, only you don't have $100,000 because they kept $20,000 of it for taxes next year. It screws up the whole plan. You follow me? Yes, sir.

So direct transfer rollover, you select the mutual funds and then move it back. Yeah, and with all of that, I love, Dave, that you just taught through that. But like you said, sitting down with a smart investor is so helpful. We do it. You know, we had a session recently where your smart investor was talking. You know, my husband and I do it. And it's just having that professional there to help you so you don't accidentally fall into a pitfall like that is super important. Yeah. And what you've got then is someone in your corner and so like we've sharon and i have used the same person the smart investor pro here in our area one of the originals

when we put the program together and we've had him for 20 plus years and if something happens today if that guy's going to be one of the first people she calls but she knows where everything is she understands everything because that guy's been in our corner teaching her which is better than me teaching her so uh we're working together and you know we're all and we're all informed and we know who the players are and you develop a long-term relationship with someone that is and then when they call you and say hey i've got an idea i want to talk to you about here's some something you can learn about and here's what's going on out there you go okay i might i might act on that or i might not you know and then you've got this person to go to after that so you're you're very wise on all of these fronts tracy to do that ramsey solutions

dot com and click on smart investor and that'll get you there it's under the elp type of a program the ramsey trusted bunch right and uh so well you mentioned that you can often smell you know smell fish in the water you can smell somebody who's not directing you in the right direction but i think a lot of people can't that's why they end up with whole life insurance that's why they end up with annuities and things like that so to know that you're going somewhere they they the smell is in the room and they knew it but they were so desperate to try to do something smart and sometimes an insurance agent or an investment person, they'll intimidate you. You feel, you know, like I know I kind of have this bad feeling, but they seem so smart.

I must be the one that's wrong. And I need to get something going. And so I'll go ahead and do this. And it's this intimidation factor, this self-consciousness, this insecurity, and you don't listen to your own spirit. God's spirit in you is saying, this one's not good. And you're going, yeah, I know, but he seems so smart and I feel so dumb and I got to get some investing going. And you push down what God's spirit is telling you. You push down what you know inside of you. This is a person I don't need to be dealing with.

And you deal with them anyway. People do that when they're buying a car and the guy's slimy, but they want the car so bad they overlook the slime. Yeah. And I mean, those people are designed, they practice selling that. They have done this thousands of times. They've rehearsed their scripts. They're ready for it.

They are ready to convince you that even if your spidey senses are going off even if you're feeling that weird feeling they've practiced the objections right they've gone through what are the typical objections people have and how do i respond so then again make them feel a little bit dumb and like i know more and convince them to get what i want them to get it's it's really it's contempt they just kind of roll their eyes and like oh oh, you silly people don't understand. It's just, it's so nasty. There is one whole life company that actually teaches a session called Intimidation Selling.

What? Yep. How to make people feel small so they buy. I mean, it really did. And it works. It really does work. It doesn't work long term, but it's not a good way to do business obviously but it's effective and it'll it'll get the sale done so yeah it's so our goal around here is not do what dave said or do what ramsey says our goal around here is understand

it so you do what you say and you learn to trust your own instincts when you're in a room and you smell a rat you go oh there's a reason it smells like a rat. There's a rat. And I should get away from the rat. Yes, run, run, rat bait, run. This is The Ramsey Show. Christine Ellis, Ramsey personality, is my co-host today. A lot of you got questions about taxes.

We get it. Taxes are confusing. They help you better handle them. We'll unpack a question or two occasionally during tax season here from our listeners. Dave, I run a daycare, and this is my first year. I'm trying to figure out what expenses are tax deductible. Well, there's a lot of tax deductions you can take as a small business owner if they have to do with a small business home office expenses liability insurance self-employment taxes advertising rent anything associated with the business if you're uh running a home daycare you have the ability to write off

a portion of the home that's being used for the business depreci depreciate it. However, you recapture that and have to pay taxes on it when you sell it. When you sell your home otherwise, it's tax-free up to a half million dollars. So I wouldn't fool with depreciation and recapture on writing off your home office square footage as a depreciation. But any dollars that you spend, you need to be running a separate checking account on your little business, and all of your daycare income goes into that, and the only thing that goes out of that is daycare expenses. So if you're buying supplies or food or diapers or whatever you're buying, sheets, I don't care what, advertising, whatever it is you're buying, they need to come out of that, and then that gives you the list of things that are deductible. You don't buy groceries for you out of that account. If you've

got profit in that account, you take it out of that account as an income and put it in your personal account and do your personal home there. But keep your home and your business accounting completely separate, even though the daycare is in your home physically. And then that enables you to do your write-offs really, really when tax time comes around if you want to file your taxes with confidence go to ramsey solutions.com slash tax ramsey solutions.com slash tax we have a new sponsor for our question of the day we announced them yesterday we're so thrilled to have them on board neighborly ramsey show question of the day sponsored by neighborly your hub for home services. Things like Mr. Reuter and Mr. Electric are part of Neighborly, and you need to check them all out.

From repairs and maintenance to remodeling and upgrades, Neighborly's trusted home service providers have trained local experts who can handle about any job. Go to Neighborly.comcom and you can find the different services and even schedule a service today. Today's question comes from Jeremy in California. My wife and I just started reading Total Money Makeover and are now in baby step two. I understand with the debt snowball that I should have my debts from lowest to highest, but what do I do when it comes to bills and collections? How do I prioritize them? Do we do them first or do we just put them in line with our current debt? Two kinds of bills are in collections. Ones you're paying on and ones you aren't.

Ones you're paying on, they're just part of the debt snowball. Just keep paying them. The ones you aren't are just sitting there. And I would just set those to the side and then work those as a separate debt snowball after you clear the things you are paying on. So if you've got a MasterCard you're current on, but you've got an old bill of some kind that's in collections and you're paying $50 a month on that, just put that in there like it's a regular payment in your debt snowball. Clear all of those. Meanwhile, you've got something else sitting over here that hasn't called you in a while

or they're calling you, but you're not paying them right now. You just let them sit there till you clear off all your debts that you are paying. Because when you get rid of all those, you don't have any payments anymore. Now you've got more money to attack those that are just sitting there. And then you call and settle those one at a time in writing, no electronic access to your checking account. Interesting. So would you put the ones that you're not paying on,

would they be even further back in the debt snowball? No, they're just a different debt snowball. Totally different. That's done after you're- Don't touch them. Don't touch them. Just list those smallest to largest. When you're completely clear of your debt that you're paying payments on, now you got a lot of money because you don't have any payments anymore. Then you take the smallest one, you call them up and you go, hey, last time we looked, we owed you $1,000. We can give you $450 for that today. We'll settle it right now. And you begin the negotiation and you settle it. You get the settlement amount in writing.

You do not give them electronic access to your checking account. You settle it. Otherwise, you get the money to them by wire or something else. But do not let them get into your account because they'll clean you out. But settle each one in writing. Settle it in writing. Settle it in writing. and if the first one doesn't want to settle they want to jack around then go to the next one go i got 450 you know and they'll go well okay we can't do that and i said well i'll call you back when i got some more but you know if you want some money today

that's how much i got today and you can work out deals with the different ones as you go through those and and it it's a little more hassle to work through them, but you work through those that way. And each time you're doing that in a lump sum, not in payments. You're not going to settle stuff with payments. That'll keep you tied to a collector forever and ever. Amen. Don't do that. That's not someone you want to be tied to.

Yeah, for real. Dionne's with us in Dallas. Hey, Dionne, what's up? Hello, Dave and Christina. Thanks for taking my call. Sure. How can we help? Yeah, I have a question concerning my son.

He is 26 years old. He's currently paying $1,500 a month in rent, and he works as a military contractor. So he's only in town six to eight weeks out of the year. And those six to eight weeks are not consecutive. So he's asking to come home and stay here. And I'm just wondering, what's the best avenue? Avenue for where he stays or? Or the avenue for if I allow him to stay, what's the best avenue for the $18,000 that he would be saving? So where is he going to save that money?

Where is he going to save it? What's he going to do with it? Yeah, currently he's paying $1,500 in rent. Oh, no. But if he doesn't have the rent, what's he going to do with the money? That's my question. Oh. Yeah, do we save that money for his first property, But if he doesn't have the rent, what's he going to do with the money? That's my question. Oh.

Yeah, do we save that money for his first property, his own property? Do we invest that $18,000? What's the best avenue? Well, what's a little bit more about his financial picture? Does he have any debt? No. No, he's debt-free. Okay, and he has a fully funded emergency fund? Correct.

And he's capable of paying the $18,000. So, I mean, he's doing well. No need, though. It's a waste because he's never there. Correct. He'd be cheaper to just rent a hotel when he's in. Yeah. Yeah, I thought about that as well.

Depends on what kind of life he wants to have. I don't care. But, you know, it's not a we, Dion. He's 26. It's what he wants to do with his money. But if he called me and said, what do I do with this extra money, I would do exactly what you said. I would build up a side fund for the purchase of his first home.

I would just start saving like crazy for his first home. He also needs to be putting out of his income 15% away for retirement in his 401k if it's available, or if not, get with a SmartVestor Pro and get a Roth IRA going. But, you know, if he does come to your house, I would, I as his dad, would want two things. I would want an exit date prearranged. This is for one year maximum. After that, we're going to, you're going to figure out something else, but this is to get you out of that lease and get you started. And two, um, I want to know that something smart's happening with that 1500.

I don't care what it's your money, son, but I want to, I want you to tell me what it is. And I want you to do that smart thing with it. I'm not letting you come in and live here so you can drink an extra $1,500 a month. That's not the plan. So that's, you know, I want to know if something good's happening. But it sounds like this kid's real responsible. Yeah, it does sound like he's responsible, and I think that's a good way of saying it, Dave,

to say make sure that he's doing something smart with it. But as long as it's something smart, unless he's listening to the call, unless you guys are diving into this research together and you're really brainstorming, I mean, it's really up to him what he does with that money. And I think there's a little bit of a risk when, you know, the kid's moving back into the house and the dad's calling and asking, you know, what do we do with this money? It's not a we. It's not a we. He's 26 years old. You're not French. You're in Texas. Oui, oui. Right?

So there you go. There's no we here. He's 26. He's a man. So he gets to choose. But yeah. But if he's going to live in my house, we're going to have a couple. We're going to know when you're leaving because I love you and you need to leave and be a man, my son.

And I also need to know that if we're doing this to save the $ want you i want just tell me what you're doing with it yep so that i know and then i'll trust you and that's that you don't owe any rent but your rent is you have an exit date and a plan you start your 401k and what are you going to do smart with your 1500 might be running some of it into retirement might be part part of it. This is The Ramsey Show. Christina Ellis, Ramsey personality, number one bestselling author, is my co-host. In the lobby of Ramsey Solutions on the debt-free stage, Alex and Rachel are with us. Hey, guys. How are you?

Good. How are you? Hi, Dave. Hi, Christina. Welcome, welcome. Good to have you Good. How are you? Hi, Dave. Hi, Christina. Welcome. Welcome. Good to have you guys. Where do y'all live?

Pittsburgh, Pennsylvania. Oh, great city. Welcome to Nashville. Thank you. Good to have you here. And how much debt have you two paid off? So, together, we paid off $57,180.77. Love it.

How long did this take well it took us one year together but then before that um i paid off 65 722 dollars by myself before i got married before you got married yeah okay and so you've been married a year all right very cool and your range of income since you've been married let's start with that so it was 45 when it was just me and then it was 97 when we were together cool what do y'all do for a living i'm a corporate trainer and i'm a manager for a rental car company excellent very cool so what kind of debt was the 57 and the 65 all kinds what wasn't it dave it's on the sign here okay yeah so we had both of our student loans was most of it

and then we had his car my car credit, credit cards, and a medical bill. Oh, wow. Look at you. Okay. Normal. You should be a graphic artist, really. I mean, this is pretty. Yeah, very neat.

Very cool. The signs, the shirt, everything. Y'all are all in. This is great. This is totally great. You drink Kool-Aid. Live like no one else t-shirts. And here you are.

I've got a feeling Rachel you started all of this since you started before the marriage so tell us the story so I graduated college and I was making 45,000 and I had 75,000 dollars in student loans and I didn't know where to start and so I told my friend Janae hi Janae and said, my husband and I follow the Dave Ramsey plan. I said, I don't know what that means. She's like, that's snowball. I'm like, I don't know what that is.

So she sent me your YouTube channel and I was watching those. And then I read your book and I was in. So when we met, I was telling him about it. And then when we got engaged engaged our church actually paid for us to go through fpu together oh very good like this church who is it who's the church so we actually when we first got married we were living in virginia so it was love church in manassas virginia oh yeah okay but what a great thing to do for young couples when they're engaged that's a part of the pre-marriage counseling is go through financial peace university it made a huge difference in our relationship

and with our money definitely helped a lot of problems before those problems actually started in the marriage yeah it's preemptive strike exactly the church is true to its name that's very loving yeah i'm very loving from love church yeah amen very very cool so what did this journey look like for y'all you got married was, was it you got married a year ago? Yeah, so we got married last November, and then we finished in December. So we took a month to figure out our new budget, getting our finances combined, and then January 1st, we were hitting the ground running. So we finished in December.

Were you resistant at all? Like, she's all in, and this is new to you. Are you like, let's go or I was for it. Cause she, I mean, she's been just the rock for me and like this whole thing. Um, I had never done a budget before. So that was a huge, huge thing. I wasn't a huge fan. I was like, this thing, this is not great. I'm not a fan of this. Um, but as months go on, we started, you know, doing the debt snowball, paying off debts left and right. And I was like, do this like this is awesome and i'm all about the budget now i'm all about using you know like every dollar app and all that stuff it's it was crazy it was just huge life change wow wow it's amazing what momentum can do when you start feeling the wins when you see the wins it's like all right let's go let's keep going how long did it take you

to do the 65 000 three years three years okay all right this is pretty impressive y'all very very cool and then the combined income and the combined energy now uh man i mean you got a hundred thousand dollar income and no debt this is uh yeah you're set up baby this is good how old are you two so i'm 27 and i'll be 30 on Sunday. Oh, y'all are going to be so rich. Right. This is ridiculous. Love that.

You can feel it. You can feel it from them. You can feel the momentum through the glass. It's like, these people, they're not done. They're going to keep going. Just getting started. And you know, the interesting thing that's hard to quantify at this point, but the very first thing you did in your brand new marriage was slay a dragon together. And so the next time a different dragon, not a money dragon, but something else comes up, you know now automatically, you know, instinctually, you will know, I can trust him, I can trust her, we can lock arms and we'll kill this dragon, whatever it is.

Because other dragons are going to come. You know they're going to come. We just don't know what they are as we go through our lives. And so but once you've mastered the art and the science of working together to slay a dragon, then dragons got no chance. They got no chance. It solidifies your marriage in that way. And again, that's not tangible.

You can't really put a dollar figure on that. But that's a life skill that y'all got out of doing this through the church and the way y'all put this together so proud of y'all oh thank you well done who was your uh who was your biggest cheerleaders looks like you brought some with you yes we brought both sets of our parents all right well they gotta be proud and thrilled because they know you'll never live in their basement exactly this is awesome yeah just come back bring grandbabies now that's your own that's your full-time job now yeah i love it way to go you guys very proud of y'all well done well done well done good stuff

all right now we back up you said the budget's a big deal what do you tell people when they go all right you freaks i mean y'all are weird you paid off you know $130,000 worth of debt 57 of it in the first year of marriage you actually don't fight about money you actually have a plan like grown-ups and stuff how did you do that tell people what the key is definitely the budget but also just having a vision that you shared together i feel like that's when he really came on board is when we like big picture saw the next 5 10 20 years down the road what we wanted our marriage to look like our family our financial situation and then kind of backtracking from there gosh i love that and being consistent about and just remembering we're never going back there

yeah that's that's that's in the past that is in the rear view future and that's just we're done with that life that's so good okay so i love that you you've got the vision you already said you've got your 5 10 you know what's next you you've met this huge milestone you got over this debt now now what's the next five years so last month we finished our Baby Step 3. Woo-hoo. Yeah. All right. Flying through that. And then we're going to try to go to Europe this year.

And we're saving for a house. Yes, you should. Incredible. I like it. I like it. I like it. I like it. Way to go, y'all.

Hey, we've got the Baby Steps bundle for you, the Live and Give bundle. It's the Baby Steps Millionaire's Book, which you are on your way, as I said, to be that, and the Total Money Makeover book to give away and inspire someone like your lives have done, and a Financial Peace University membership, which started the whole thing for you. You can give that to a friend, a family member, help them get them going. We're going to give you the ability to pay it forward with some of these things. Thank you guys so much. Thank you guys. You are heroes, man. Thanks for letting us be here. You are heroes. You're amazing. it's powerful to watch you this is uh you're inspiring lots of people done this stuff lots of people are doing

this stuff and they're people just like alex and rachel from pittsburgh 57 000 paid off in the first year of marriage and she knocked out 65 before they started that making 45 up to 97 now. Count it down. Let's hear a debt-free scream. Three, two, one. We're debt-free! Yeah! Yeah! Oh, my goodness. That is how it's done. I'm just like sitting here thinking,

make sure you call us for the Baby Steps Millionaire Theme Hour here in a few years. I can just feel it happening. $100 a month invested from 25 to 65 is $1.1 million. So you realize what $2,000 a month invested is because they don't have any payments from 25 to 65. That's $20 million. If I'm half wrong, I think they're going to be okay. They're going to be okay.

That's what I just said. They're going to be real good. That's what I just said. They're going to be rich. That's the actual math behind me saying, you're going to be rich. It wasn't just like this. Yeah, a dream. They make $100,000 a year.

They're 25 years old. I mean, yeah. Awesome. Just awesome. So good! Very cool! This is The Ramsey Show. Thank you for joining us, America. We're glad you're here. Our scripture of the day, James 4, 14. Yet you do not know what tomorrow will bring. What is your life? For you are a mist that appears for a little time and then vanishes.

Evangeline Booth said, it's not how many years we live, but what we do with them. Noah is in Columbus. Noah, welcome to the Ramsey Show. Hi, Dave. How are you doing? Better than I deserve, man. What's up? I could have guessed, sir. So thanks for taking my call. Uh, I am hoping for some advice on my house hunt here. So I'm not doing anything too crazy too quickly. Um, I'm fervently regretting

not pulling the trigger sooner on buying a house when things were more affordable from both the price and rate perspective. Said everyone who's ever waited at all. Yeah, I mean, this narrative is getting overplayed. Don't stop believing by churning. You know, there aren't many listings. I have very specific parameters on a house that I want. I am almost totally blind, so I can't drive. And there is this program for transportation.

That's my main concern here is there's this program I have in my city where it's subsidized. It's a dollar a mile door-to-door car transportation. But I can't really predict what the government's going to do. Maybe they'll shut it down. I don't want to buy a house way far away from a bus stop. And then they go, oh, we're going to take back this program. That's logical. Yeah, I want to be in a house that's, you know, I started out saying a half a mile from a bus stop.

And now, like, let's see, I've been doing this for a month now, and I've gotten exactly two listings in the area that I wanted. Who's looking for you? Oh, I've got hooked up with one of your local ELPs. Okay. And they've only found two so far that meet the criteria. Well, I mean, I have like a set area where it searches because it's not like a perfect square. So there's parts of it, there's listings that are coming in

that don't really, that I just kind of dismiss just based on, like I have, it's kind of hard for me to explain to him exactly what I want. I know what I want, but it's kind of hard for me to explain to him exactly what I want. I know what I want, but it's kind of hard to like customize it in the MLS. You know what I'm saying? So, but you ought to be able to tell, oh, he can't, he can't put it into MLS, but he can be watching or she can be watching for you and, and filter it out for you. That's what, that's why it's only down to two. Is that right?

I mean, I think I could already start looking. You told me enough already. Okay. You're, you're sight impaired. You need to be near a bus stop, within a half of a mile bus stop, and then you give me the parameters in the street areas, and then you've probably given them a few other guidelines. Apparently, the type of house is probably one level maybe. I don't know what.

Yeah, I mean, like my price range, $350 or less, preferably much less. Yeah. You know, certain square footage and all of that. But, I mean, what he's giving me does encompass my entire area, and I can tell you there have only been two listings so far that have really, really gotten me excited. Okay. So what's your question?

In the last month. Yeah. So my question is, I'm wondering how much of these parameters are, you know, quality of the home, things of that nature. I should sacrifice in favor of, you know, jumping on an opportunity when maybe it's not the perfect house, but at least it gets me out of renting. I'm sick of renting. Well, you can decide as far as the quality, the layout, the square footage, those kinds of things.

The only one I would tell you not to sacrifice on is it needs to meet your basic living standards, which is going to be the bus stop thing okay and it's obviously whatever whatever issue you've got that issues you need to deal with as far as floor plan and those kinds of things which i would imagine are reasonable but uh you need to know you know navigate that um and then don't go oh i can afford anything because i have these specific problems no that's going to put you in more problems. No. So don't violate the financial boundaries that you set for yourself. Yeah. And I would list them out and prioritize, like even going down to, you said, I have a certain square footage requirement. Here's my financial requirement. Here's the bus stop requirement, all of that. And, you know, you said

that with the agent that they don't even know your requirements completely, and they're not completely clear on what you're looking for. So I would do that both for yourself and for your agent so that they can be on the lookout and be really actively looking for you. And then for you to go, man, okay, if a house comes out and it's not, and it's 1500 square feet versus 2000 square feet, the square footage isn't as important to me. I'm willing to go down on that. Yeah. Yeah. And you know, I'd love to have three bedrooms, but I can deal with two. Right. I'd love to have X, but I can deal with Y, you know, and those kinds of things. But the location, the configuration to deal with the site impairment and the location near a bus stop is, I don't think those, I think those are deal breakers. You just, we're not going to do that.

That's going to be at the top of that list and then then the thing you got to mix into the equation noah and you've already said it as um i have some very specific requirements yes you do and that's going to narrow the market yes it is and that means it's probably going to take a little longer and a little more effort to get it right but when you get it right you're going to be glad you did and so uh narrow your requirements enough that you can reasonably find something but not so much that you end up buying something that's not usable in your situation. Don't do that. And another important part of that conversation is just, and this is kind of a hard conversation, is just grieving what the market was. You said that you have a tough time. You're like, man, I wish I would have bought, but then letting that go and going, okay,

like this is the market now and these are the requirements I can afford and just kind of figuring out what you can be content with. Yeah, man. You know those houses down here south of us in Spring Hill? Yes. You know how many of those I could have bought in 2008? Ugh. Probably a lot.

For about 15% of what they're selling now. Oh, my gosh. And I didn't. I'm kind of grieving that. I bet. I bet. I bet. Chris is in Dallas, Texas. Hey, Chris, welcome to the Ramsey Show.

Hey, Dave, how are you? Thank you. What's up? Well, here is my situation. I'll give you kind of a list of facts. I just totaled my paid-off oh i was hit oh no are you okay i'm okay i walked away and thankfully um so i currently do not have a vehicle how much insurance gonna give you for it insurance is going to give me eight thousand dollars which

is what the car is worth right uh the car was paid paid off. No, I didn't ask you what it was paid off. I said it's what it's worth, right? Yes, sir. It was a 2012. So you were driving an $8,000 car. Now you got $8,000 coming from the insurance company. Okay. How can we help? Yes, sir. Okay. I'm trying to determine how much cars should I purchase? And I say that because I would like to buy my first townhouse in the next 18 months. And, um, you know, the deal was I was actually going to purchase it before, um, before the crash, but with prices and inventory as they are, it makes more sense to wait for better options and locations. So I wanted to see how much car I should get. Do you have money saved for your down payment on the townhouse?

Well, I've got some money. I don't know if it's necessarily allocated for the townhouse. So kind of my stats are I've got $22,000 in emergency savings, and I've got $3,200 on a furniture bill that's a zero percent that I'm paying $120 a month on. Oh, crud. Pay that off today. Pay it off today?

Okay. Yeah, that's silly. Okay. So now we've got $19,000 in our emergency fund. What other money have you got in savings? You got money saved for a down payment or not? I don't have down payments specifically. Okay, then the car doesn't affect that.

You buy an $8,000 car. Okay. You have $8,000. Okay. What's wrong with that? You said get another $8,000. Well, cars are more expensive these days. No, they're not.

You were driving an $8,000 car. Get you an $8,000 car. That car's market value on that car was $8,000. That's why the insurance company is giving you $8,000. That means you can go buy that car for $8,000 car. Get you an $8,000 car. That car's market value on that car was $8,000. That's why the insurance company's giving you $8,000. That means you can go buy that car for $8,000. Well, the sale on that car now when I look for it is

$12,000 to $13,000. No, it's not. No, it's not. If it is, the insurance company needs to give you $12,000 to $13,000. Because your insurance policy says that you have to get market value for the car when it's total. They don't get to just make up a number and pay you wholesale.

They pay you what it takes to replace that car. So if you can prove it takes $12,000 to replace that car, you need to get $12,000 from them. Because that's your contract with them. But this idea that I need to move up in car because I totaled my car is a bad idea. Use the money that you get and buy a car. That puts this hour of the Ramsey Show in the books. 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. Dave here. You can find all of our shows with the Ramsey Network app

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