The Ramsey Show - App - Why Cash Back Credit Cards Aren’t All They Are Cracked Up To Be (Hour 2)

Episode Date: May 30, 2024

Live from the headquarters of Ramsey Solutions, it's the Ramsey Show, where we help people build wealth, do work that they love, and create actual amazing relationships. That's what we're all about we're taking your calls all hour long myself jade warshaw joined by rachel cruz she's the best-selling author of the book i'm glad for where i am which is the sequel to i'm glad for what i have i sometimes have to look at it rachel because i'm like it's a little wordy i'm glad for what i have i'm glad for where i am and i guess some point, maybe there'll be another one. Yes, there might be another one of it might be a generosity one coming coming down the pipeline. But yeah,

the kids books, they've been fun. Yeah, I can't wait for that. Yeah, that's excellent. So we're taking your calls. You can give us a call the number is 888-825-5225. And we'll hook you up with our best advice. All right, we've got Jenny. She's in Austin, Texas on the line. What's going on, Jenny? Hey guys, thank you so much for taking my call. So my husband and I need help. We're on baby step three, but then we bought a house.

So now we're back to baby step one. And our key question is, should we sell our home that we bought a year ago or sell one of the cars that we have fully paid off? And some context here would be, we have 30,000 in debt. 10,000 of that is a credit card. We have about 10,500 in a car loan and the rest, which is a little over 8,000 is for, um, the IRS taxes that we owe from this past tax season. Um, and his income fluctuates. So there are some months where our mortgage payment is, it reaches about 50% of our monthly

take home pay. Other months, it is in between 20 to 25% of our take-home pay. So what would be the best way to tackle the debt? And what do you recommend? Help me understand a little bit of what happened here because you are in baby step three, you buy the house and arguably, depending on the month, it can be pretty costly for you guys. But what caused you to go into what caused the car debt and the credit card debt? And I guess the IRS was poor planning, but what caused you to slide so heavily back into the mud? Yeah. So as far as the car, we only had one at the time and we needed a second vehicle. And the only thing that we had was the emergency fund, but I guess we didn't have enough of every month expenses. So

I know that we were, we pretty much depleted that and had to take on some things on the credit card and also just poor decisions. Okay. So then let's talk about this mortgage. So you said sometimes it's 25%, but it could be as much as 50%. Tell us about the work and why it's fluctuating such. Correct. Yes. So my husband, he is self-employed. I am on a fixed income, but I also can get a little bit more income here and there because I have a license to sell real estate. So there are some months where we make about $11,000. Other months we make about $6,000. It's just fluctuating. Yeah. I mean, honestly, Jenny, this kind of sounds just like the stereotypical lifestyle creep scenario. I mean, you guys were fine. kind of sounds just like the stereotypical lifestyle creep scenario.

I mean, you guys were fine. Yes, you're a one-car family, but everything was going. I mean, you had money in the bank. You didn't have debts. And then suddenly, whatever it is, changed that we need to buy a house. We need another car. Oh, my gosh, we didn't plan accordingly. So even our expenses month to month, we don't have the cash for our income.

So now we have to supplement credit cards i mean it's it is that classic lifestyle creep that we're seeing everywhere and again people we want to blame inflation we want to blame all of this but you know do you do you understand like when you guys look back three years ago that you felt uh financially in a spot of like okay our, our head's above water. We don't have any payments. We have an emergency fund in place. And that level of peace, that's what you want to get back to, right?

Yes, that's correct. So that's probably going to mean going back in lifestyle because that's really the only way that this is going to be fixed, I think. I mean, yeah, you guys can continue to try to up your income for sure, but this $10,000 in credit card debt, a car loan, I mean, all of this is continuing to hang around your neck.

So I'm wondering, yeah, if you guys just rushed into the house, tell me what the thought process was when you were buying the house. Yeah, I do feel like we rushed into it because before we were renting and our lease was coming up to an end. So we were considering renting again, but we wanted to see if we could qualify for the home and we did, but we actually ended up using down payment assistance. So I was running the numbers on our house and conservatively it's worth around $310 right now because we bought it last year. And we owe about $295 in the loan as well as DPA, which would be close to $12,000. Okay. And no savings right now no not at this time okay yeah i think that um the pattern here is

an opportunity presents itself and we take it regardless of if we can afford it or not because the truth is you couldn't afford to get this house if you had down payment assistance um yeah and people people get mad at our house formula but you guys this is exactly why because the bank doesn't care the bank is going to give you any amount of money basically is what it feels like way overextended and then people take it you know and this is not me yelling at you Jenny but just in general like this is what happens you go sit in the office and they're like well look this is how much and they slide that number over and you're like holy crap sure we'll do that we'll get this we how much. And they slide that number over and you're like, holy crap. Sure, we'll do that.

We'll get this, we'll get a house and it'll be great. And then you look up and you can't even pay the bills and you're depending on MasterCard at that point. You know, so I mean, selling the house would be the last thing I would do, Jenny. I would try to up income. I would sell the card, cut up the credit cards, get these taxes.

I mean, $8,000 in taxes, there's a chance that you'd probably have to go just get a personal loan for that just to get the IRS out of your life. But I mean, this is you guys like working hard. We actually, so we have two cars. One is paid off and the other one has a loan. But the vehicle that's paid off, it's worth around $80,000 to $20,000, according to Kelly Blue Book. So I guess, should we sell that vehicle that is paid off and just kind of liquidate the money that we have there? How much, you owe $10,000 on the car with the loan? Yes. And then what would it sell for? That car, that one ranges maybe around $8,000 to $10,000.

So you'd break even on that one? Potentially, yes. Like if you sold it for $10,000, you owe $10,000. So it would just be a break even. Right. And that monthly payment is $209,000. But you're saying if you sold the paid off car, you'd 18k is that what i heard you say yes 18,000 to 20,000 so then you could pay off the existing car and then pay off the irs yes i might do that okay yeah obviously it's in your book right now yeah is. Is what you want. Telling the car.

Yep. So that takes care of car and taxes. Then you got $10,000 in credit card debt that you guys need to tackle. And then if your income does not come up or that, or if the, if the high months, Jenny, when you guys have a really good month,

putting some money aside and savings for when it's a down month so that it's not eating up 50% of your income. You can take some of that from savings and you guys have a good plan. We have the mountains and valleys. You can do that, but you can't sustain that for a long time. And your income has to come up for you to keep this house. If not, it's going to suck you guys dry money-wise. So yeah, I mean, unless the income comes up, I would sell it. But if you guys can get your income up, you can keep it. This is The Ramsey Show. This show is sponsored by BetterHelp.

All right, so I was born and raised in Texas, and I love the myth of the lone cowboy. You know, the guy who doesn't need anyone or anything. It's a fun story, and it's a lie. In our self-obsessed society, we're obsessed about our own diets, our own workout routines, our own jobs, our own social media feeds, everything. It's easy to forget that no one can do life alone. And I don't care if you're an introvert, an extrovert, or whatever you want to call yourself, we all have to have a community and a support system to do life

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To get started, just fill out a short online survey to get matched with a licensed therapist. And if it's not the right fit, you can switch therapists at any time for no extra cost. This month, start to build your support system with BetterHelp. Visit betterhelp.com slash Ramsey Radio to get 10% off your first month. That's betterhelp, H-E-L-P.com slash Ramsey Radio. You are listening to The Ramsey Show. I'm Jade Warshaw, joined by Rachel Cruz. We're taking calls about your life, what's going on with your money all hour long. So feel free to chime in.

The number is 888-825-5225. And a nice gentleman named Christian will pick up on the line and get your story straight with you and get you ready to come on the air and then you'll get to talk to the two of us so if you want to do that we'd be happy to hear from you in the meantime let's talk about the Ramsey Show question of the day today's question comes from Andy in Kentucky yeah Andy says I recently found several debit card options that give customers 1% return on how much money that you spend. It sounds like a good alternative to using credit cards since I would still get rewards, but I avoid going into debt. What are your thoughts on this? Yeah. I mean, if it's a debit card, I'm all about it. There are some banks that are trying

to be competitive in this space and do more of this. So you may see more and more of it come out. Yeah, I mean, I think it's fine. Our big rule of the credit card, though, you know, why we say spending your money is that you're not going into debt. And a lot of people's motivation to sign up with credit cards is because of these rewards and these points and all of that. And what ends up happening is, you know, you end up spending more, statistically speaking. And for some people, just like our last call, you get in a hard spot and you're going to be spending the credit card in the back of your head. You're like, well, at least we're getting these points, these airline miles, right?

And you're playing this whole game, which is going to eventually get you into trouble. And so a debit card really does keep you in the safe lane because it's just your money that you're playing this this whole game which is going to eventually get you into trouble and so a debit card really does keep you on the safe in the safe lane because it's just your money that you're spending now if you spend too much you know there's overdraft fees and all that so you have to be careful with that but um but i would i would base where i bank more on the bank itself you know be like more local type and and again if there's a perk or something like that's fine but I that would not be my motivation to change banks or to do something different with that I agree I think if it is your motivation to change then you might be the one that gets caught overspending to get the one percent I'm like one percent thank you but spend five hundred dollars to get five dollars back you're like oh my god I spent a month or a little sticks at sonic it's just not exciting it's just not not really gonna change your life yeah sorry about andy do what

you will yeah they make you feel like it though don't they i mean they're like cash back one percent you're like you actually do the math and you're like oh my god okay you gotta spend a lot to get a very very very little bit yeah yeah it Yeah. Yeah, it's probably not for me. All right. Let's talk to you. Sorry, Andy in Kentucky. Sorry, we kind of poo-pooed on that. But you can do what you want to do. I just don't think that 1% is enough

to get out of bed in the morning. All right, let's go to Anchorage, Alaska. We've got Cameron on the line. What's going on, Cameron? Oh, not much. I'm just having a good morning up here. Things are starting to warm up in Alaska. Yay. I'm happy for you. Is it the light season or the dark? When does the dark season end?

It's, uh, yeah, it's the light season. So, um, this is when everything happens. Everybody wakes up and gets out and about. I love that for you. How can we help today? Yeah. Well, um, I used to have an airplane. Um, and that's kind of typical of Alaskans. We, we buy airplanes, like maybe Californians buy Teslas. Is it like the kind that can land on the water? Um, you know, I, uh, it was capable of that. Um, but no, I, I never owned a float plane. It was, it was a, it was a standard wheel plane. It had skis and stuff for like winter time, but no, it, uh, it wasn't a float plane. So, right. So you sold it. So you sold it.

Yeah. So I sold it. Yep. So I sold it. Um, I kind of lost interest in it. We've had two children since, since I bought it and, um, uh, actually sold it for more than I bought it for, which is kind of insane. Yeah, planes appreciate like maybe classic cars, I guess.

What'd you sell it for? Can we ask? I sold it for 135, which is quite a bit more than I bought it for in five years. So I'm planning on paying taxes on that. So I'm setting that aside. But I'm guessing probably I'll end up with like 120, pre and clear after that, according to my tax guy. So I'm trying to decide what to do with the money. Um, I have some options. Um, we, we have a mortgage. I thought

about throwing it at my mortgage. Um, but I do have kind of an interesting side hustle that I, I have an opportunity to invest in and, um, I've kind of wanted to invest in for the majority of my life. What's that? I just kind of want to see commercial fishing. I grew up commercial fishing in Bristol Bay, Alaska. My family has been in it since about 1911. It's a lot of heritage there, a lot of my culture is there. But I went off and I went to school back when fishing wasn't very good. And my plan

at some point in time was to buy an airplane and to be a commercial fisherman again, maybe. But yeah, I guess I lost interest in the plane, but I do have an opportunity maybe to get back into it. Seasons haven't been good, so prices are back down. I might be able to afford. Listen, I hope that i guess my first thought let me tell you my first thought is you bought the plane and you lost interest i would hate for you to invest in commercial fishing in those interests but that's just me off off the top so um let's let's get a picture of the rest of your finances um what else is going on with your money do you have any other debt? We use a series of baby steps. So

I kind of want to see where you're at in the baby steps and then that'll inform our answer. Yeah, sure. So we have no debt except for our mortgage. Cool. And how much do you guys owe on the mortgage? $350. Okay. And you guys are investing in retirement and everything? Yeah. So my wife has two options for her job, kind of standard 401k. And then she also invests in a 457B. And then I have a 403B with my job. Okay. And how much is it going to take to get into this commercial fishing? So I have the boat already.

It needs a little bit of work. The permit, it's a limited entry permit system. There's only about 1,800 permits in this area of Alaska. So it does fluctuate based on the market. Right now, two years ago, permits were $260,000. But then there's a really terrible season. Prices went down drastically. And this last year, they were about $130,000.

How does that make you feel that you're investing when, like, how often does the season fluctuate? Oh, all the time. In 2005, my dad and I bought in when I was a little kid, and we bought a permit for $35,000. So it can, it can definitely go up and down. Um, so you kind of have to take a step back and look at 10 year timelines, uh, in the last 10 years, you know, the average, you know, there, there's seasons where you don't make anything. How long is the permit good for? I'm sorry? How long is the permit good for? How many years? It's a, it's a, it many years? It's a limited entry, so when you buy, you own it. It's yours.

Okay, so the one that you guys bought back in the day for $35,000, that's just your dad's? You're not still on it? Yeah, he sold it two years later for $80,000. So that kind of is an example of the crazy fluctuations. And I've been waiting for a long time to invest back into this fishery but it's all about timing you know when the seasons are down that's when you want to buy in. Are you wanting to do this Cameron full-time? No this is a it's a one month kind of commitment

at the end of June I'm actually going out there June 20th to fish with my family and usually you get done around July 12th. And what can you make? It's about a month. What can you earn in that one month? Oh boy. So there was a record harvest in 2022. And not the record, like what's the normal?

No, absolutely. I would say the average is maybe $50,000 to $70,000 in that month. Okay. That's an average. So it would take you... That's like a 10-year average, I would say. Yeah. But there are years where it's zero. Yeah. And this would just be on the side? This doesn't affect your full-time job or anything like that? You could get time off to do this? Oh, yeah. Okay. Yeah. I'm not mad at it. And how much would the permit be again? Say

that number again for this year? Well, you know, they just announced this price increase this year because last year was really rough. We only got 50 cents a pound for salmon. And then this year, because they wanted to convince fishermen to come back because it was such a terrible year last year, they put it at a dollar. So the permit price is shot back up. Did I hear you say $130? $170? Yeah, $130. It went from $130 to probably about, it's probably around $150, $170 right now. But there are no permits available. Everyone bought back in when they heard the price. Well, here's the thing. You've got $130 to $120 to work with. And so I'm not taking on debt to do this. If you could get it for $120, I'd probably do it.

And if your wife agrees, that's a big caveat to all of this. For sure. I think that you guys will keep chugging away at the mortgage because I think that you should be intentional about that. But I think this is a really cool way that you can make that happen. I do something your family's done for decades. Yeah. If you and your wife are on the same page, we're good with it.

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And it was off the hook. Like, it went hard in the paint. It was so good. It was such a great weekend to the point, Jade, that we put the tickets on sale for next year there. And they almost completely sold out just at the event. Just at the event. So, a majority of the people coming were, like, return, you know, people that were returning. Yeah. And so, then the fall event sold out. We have one in october and it's tickets already gone they're already gone so we decided okay it's obviously a hot topic money and marriage kind

of a couple's getaway so we just announced that we're doing a valentine's weekend 2025 another event so you can make sure to check that out at ramseysolutions.com slash events. It's myself, Dr. John Deloney. Jade, you were a guest on the last one. I hope, Rachel, can I come back on this one? We're going to invite you back. Yay! And it was such, yeah, it was such a great,

such a great weekend. I think the mindset too of just getting away and Nashville is such a fun city. And we really tailor, the way we build this event is like, we want a great experience. We want a great weekend for you guys to enjoy and have fun. Also to learn and be motivated for change,

be encouraged in the places of these two areas of your life that you want to be encouraged. So tickets start at $699 and the early bird pricing is still happening. So you can save up to $350. Wow, that's big. And if you want a VIP level ticket,

get that because those are always can save up to $350. Wow, that's big. And if you want a VIP level ticket, get that. Because those are always the first year to sell out. So make sure to check that out. So again, it's February 13th through the 15th, 2025. Valentine's weekend, money and marriage. I love it. Dr. John Delaney and myself. Yeah, we're so excited.

So romantic. One of the things I loved about the event, because I was there just as a spectator. You know, I got to do my little thing for a moment but I watched and you guys are so open like there's no holds barred like all the conversation is very real and so if you don't want fluff this is the event for you no fluff zone no fluff zone here all right I'm All right. Let's go to Mike. He's in Pittsburgh, Pennsylvania. He's got a question for us. What's up, Mike?

Hey, ladies. How are you? Good afternoon. Great. How can we help? Good. Hey, I got a quick question for you, and that is simply, how do we, my wife and I, bridge the gap to retirement?

So maybe different than some of your callers, 49, 50 years old, became debt-free at the age of 32. So kudos to my wife for pushing us to get to that point. Currently right now, we have $2.1 million in savings, which is tied up mostly into our 401ks. I'd say half of that is in our 401ks, Roth IRAs. The other sub-million, million-ish is in Vanguard as well, but we have access to. $154,000 roughly in emergency funds. And the question is, at 50 years old, how can we retire? How can we get out of our corporate jobs? I am in medical sales. She's a VP of finance. And we have a $300,000 combined income per year, and we're ready to go enough's enough how do we

transition from our career corporate lives into that retirement life that we are desperate to seek so my first question before we like get into those numbers is okay so you want to leave your jobs and not do that grind but you're going to do something to bring in money at a less intense pace? Yeah, so here's a funny thing. Over COVID, I developed, we created a little ice cream shack from the ground up. That ice cream stand is pretty much self-sustaining. We do about $150,000 a year in sales, which is open five months out of the year. It's somewhat profitable, but also designed in the aspect of being able, hopefully, to break even that we can shuffle money to, we have 15-year-old twin daughters. Oh, so that, sorry, can I just clarify?

Is that, that's top line, that's not profit, right? Yeah? No, that's correct. No, you're 100% correct. That is $150,000 in sales. That is not top line. It is being managed by a manager, our employees, and again, small operation, but still pretty productive. What does it bring you for cash? What does it bring you in cash? That's a great question. We are right now with pretty much hands-off filling in here and there. We're roughly $30,000 to $50,000 a year. Okay. Okay. sorry to break in.

I just wanted to clarify that. That's a fun little thing just to start in COVID and make an extra $50,000 a year. I know, right? Well, the fact of the matter is that's when online shopping became rampant and our kids found out about online shopping and we were like,

hey, if you want to learn what a dollar is, let's make you work for it. So they work. We pay them a handsome little salary because it's a great way for us to shuffle money out of the business to them, number one. Number two, working on Roth IRAs for them as well. Different things that we can use our business side of things to move money their way. That's great. So let's just spitball this. Pretend that you and your wife walk away from your $300,000 income. You're taking $50,000, hopefully, a year from this ice cream shop.

Is there anything else that you'd be doing? That's my first question. And then my follow-up question quickly after that would be, what do you think that you would need to take home yearly in order to enjoy your life at this point? Yeah, it's a great question. And our neck of the woods cost of living is relatively dirt cheap. Being debt free ultimately has helped us do that. What else would I be doing? Golfing and whatnot. But no, literally, it's time to get away from the corporate life that we currently live. And I would say, how much do we need? I would guess 50 to 75,000 a year, maybe at most,

maybe at most, but don't forget, we've got 15 year old twin daughters that we've got to put through college in four more years. But you have the same, you, do you have investments set aside for that? Small amounts. I think they each only have maybe 30, $35,000. How much do you have in non-retirement, Mike? You said you had a Vanguard that you could get to. You said a million in that? Yeah, there's about a million in that and about $154,000 in emergency. Okay, okay. Is the $154,000...

It's in my local bank money market account. Okay, I'm just thinking, numbers-wise, that's a really hefty emergency fund. Would you agree? Yeah. So you could lower that. I don't disagree, but it's how we've worked our lives is we lived off of one salary. We lived off of her salary, my salary went into, and once it got into the checking account, bank account, once it got to a certain level, we just simply clicked transfer, moved it

to Vanguard. Gotcha. Transfer, moved to Vanguard. Okay. So yeah. So I mean, yeah, I would be looking at kids college for sure. I mean, the Vanguard accounts that you guys have, you need $750,000 for just your lifestyle of 75. That doesn't include anything that this ice cream shop is bringing in. So it'd be even less than that. Do you know what your rate of return has been? We've actually done pretty decent. So out of the $2.1 million year to date, so you can do the math for me because I'm not that smart. We have captured, I think, $85,000 in returns from January through the end of April. So, okay. What I would do, sorry, Rachel, I shouldn't have broken on you. Here's the thing. Initially, what you're looking for is that you can live off the earnings,

right? And so if you've been averaging an annualized rate of return, not just for that year, but for all of the years combined. If it's an annualized average of 10% or greater, then that's great. Of course, you would need to account for inflation and things like that. But, you know, we can spitball numbers and be like, yeah, you should be able to do it. But I really would sit down with a smart investor pro just to make sure because you do. Because you can't touch the 401k or Roths really until 59 and a half. So, so yeah, you guys have about 10 years that you'll need to float and like jade's saying not touching the principle how do we bridge this gap yes so i mean it would be either using the earnings off of the

vanguard or it would be um i mean you could dip into the vanguard if you really wanted to but i also think mike you got i mean golf and all that it is so great and fun and all of it, but I do think that you guys may get three years into it and just be like, let's start something else. Let's find another way to spend time and bring in some money too. So I think you don't have to go from corporate

40-hour-a-week crazy job to nothing. Kind of like what Jade was saying, maybe just for a season you guys take off and relax. You have the bandwidth to do that. And then maybe what Jade was saying, maybe just for a season, you guys take off and relax. You have the bandwidth to do that. And then maybe in, you know, 18 months, you're like, okay, let's find something else that maybe we can just kind of just do to make $25,000. Yeah, that's not a lot. That's right. Yeah. Yeah. To bridge that gap until you guys can hit that retirement age to really access then the rest of this money. I love that idea,

Rachel. Just take a nice vacation break, a hiatus, if you will. Yeah, do a year, 18 months. Yeah, it's great. And then get a side hustle making 25K a year and you don't have to touch that money. This is The Ramsey Show. Open phone lines at 888-825-5225. Give us a call with your deepest, darkest money secrets and situations, and we'll do our best to sort through it and help you find the best next right step. That's what Kate from Orlando, Florida is doing. So let's go to her. What's going on, Kate?

Hi, good afternoon. I need your help specifically to find out what do we sell or liquidate to purchase our retirement home? My husband and I are both federal retirees. I've been retired for about a year. We have $2.3 million in assets, cash, investments, home, and properties. And we have $15,000 in debt. What kind of debt is it? Excuse me?

What kind of debt is the $15,000? My husband just bought a 2024 F-250, and he paid monthly cash for it, and he has $15,000 debt on that, and he's going to pay that off in two years. Can you just reach over and pull some of that cash somewhere? Do you have anything liquid that you can pay it off with? We do and he said he wanted to keep it for the gap insurance. Something about getting a loan and to ensure that it had gap insurance in case it got into an accident or something. It will cover the value of the truck. I don't see what one has to do with the other, but what's your main question? I want to buy a $700,000 retirement home. And we have two homes. We're going to sell one.

It's worth about $280,000. And then we need to find or free up $420,000 because my husband does not want to hold a mortgage. He wants to be free and clear, which is great. I agree with. He said that he would hold a mortgage for two years, but he'd prefer not to. So out of all of our funds that we have, I'd like to know, how do we go about or what's the best thing to liquidate or sell uh in order to come up with the other four hundred twenty thousand dollars you said you had two properties is that right kate uh yes we have two what's the other one it's worth about two hundred and eighty thousand we're going to move into the other one it's also worth about two hundred eighty thousand okay we've just

renovated it we're going to move into it and then sell, update this one and sell it. So when you sell, when you sell whichever one, what are you going to clear on it? We're going to clear 280. 280. Okay. And so you're saying you need to find another 420. Okay. But will you sell the other property too? My husband really wants to keep that for retirement, for when we're 80, you know, and it's a much smaller property. It's 1,100 square feet, and it's in a great area.

It was the worst house on a nice block. So why don't you all just move there now? We are. We're moving there next week. I know, but why are you wanting to buy a $700,000 home? I want a larger home. It's a small home, but I want a larger home with room and I want a pool. How are you going to be splitting your time?

What do you mean splitting our time? Is it like I'm splitting half of my time in this great $700,000 home? Maybe it's on a lake or whatever. And then I live here part of the time because I just can't see the point of having two personal residences. We will be either renting it out, renting out, renting out the smaller home, the 1100 square foot. We're going to rent it out or VRBO it one or the other. Okay. Once we find the $700,000 home. Okay. We'll live into that full time. Can you, can you sparse out the 2.3 million?

Like how it's, where, where it's at? Yep. Yep. I have $ four thousand seven hundred in cash or we do we have one point two seven in our retirement account okay eleven I have an eleven thousand dollar Roth IRA I don't think I can get to that for another couple of years though we wouldn't and then we have one point or about one million in properties that includes the two houses and then we have three pieces of property. Tell us about the three other pieces. We have one large piece of property

it's six acres it's probably worth an estimate we estimated it to about four hundred thousand. Okay. And then we have a smaller piece of property it It's about 40,000 here locally. And then we have another five acres out of state that's worth about 38,000. So why wouldn't you just liquidate that first piece of land for 400? Oh, because it's a gorgeous piece of property. Listen, you told me you want a $700,000 house. Something's got to give. I know, I know. But is there any way we can make this work without getting up that piece of property? Well, where do you think the money would come from? Like, if you looked at these numbers, what is it that you've got your eye on?

Well, we had thought we had put a bid in on a house for cash. We were going to take it out of our retirement accounts. But we would have to pay the interest, and it would put us up into the 32%. Kate, what are you all going to live off what are y'all going to live off of? What are you going to live off of? We have a combined $9,000 retirement, or excuse me, $9,000 per month pension. Okay.

How old are you guys? We have $9,000. I'm 58, and he's 61. Okay, okay. Well, that makes a good difference i mean that's a difference that that helps it for sure um here's here's what i would i almost want to just are all these properties paid for everything's paid for outright it is all right okay okay um i mean i almost the other two i mean you could free up 78, 80,000 in these smaller

two properties just to give you some wiggle room in this, you know, 420. I mean, man, that's I mean, that's cashing out. I mean, not quite half of retirement, but that's a that's a good bit of your retirement, even though I know you're getting a pension and all of that, which is great. But I have a hard time touching that nest egg. Right. That 1.2, yeah. Because what's your lifestyle right now? How much do you guys spend a month? What are you living off of?

Gosh, I wouldn't even know what we're spending a month. I would say no more than $1,200 a month. And that's for utilities and maybe food, maybe a little bit more than that. Maybe $1,200 a month. And that's for four utilities and maybe food, maybe a little bit more than that, maybe $1,400 a month. So you've got more than enough. Can I ask you, not to toggle you back and forth, but going back to the land, what were your plans with that? Because when I mentioned it, you're like, oh, it's a beautiful piece of land as though like one day you were going to build something on it. But I'm like, well, you've got the $700,000 house. We had planned to build on it, but we just got finished doing a renovation about six months ago, and it literally almost killed me. And we're lucky we're still together.

So what's the plan on the land now then? It's a play place, four wheelers. It's just a great escape. Do y'all use it? Yeah, we go down there a couple times a week. Okay. Okay. It's about 30 minutes away from our house. Gotcha. I'm just being honest. Okay. And you're going to go away from this and you guys are going to decide what to do. But the fact that you've got 1.2 in cash, cash, like everything else is tied up in properties. It bothers me to take, you know, a third of that and cash it out at this stage. I know, but you're getting the 9K.

You'd probably be fine. But if it were me, if I were in your shoes, I would like the feeling of having that 1.2 in retirement. It's continuing to grow. And I would either do one of two things. I'd either sell the 400K of land and be able to buy this house outright, or I would do what Rachel said and I'd liquidate properties two and three, the one that's worth 40K and the one that's worth 38.

And I would liquidate the 280. I would take the house too. Yeah, that one too. Because here's the deal too, you know, Kate, you're saying, yeah, but eventually we will want to move back to that but you don't know that the seven hundred thousand dollar house it's gonna be right paid for yeah that's maybe you guys are and maybe you guys are fine maybe that's the that's the forever house like you never know and if you wanted to move

to a smaller home which is the 280 home you're gonna sell what's gonna probably be a million dollar house at that point and go get a smaller home and probably make some money too, right? So I would sell the 280. I would sell the other two properties, two and three. And gosh, that gets you to- Gets you pretty close. Close to that 400. Yeah. And then you could take the rest out. Yeah. And then if you needed to take a little bit out, you guys could. Okay.

That's what I would do. Because you guys have just done a lot, which is really great. But if these two properties, you know, that you don't necessarily need. Just sitting there. And a house that you're going, you think you might, it's the same concept people do for their kids.

Like, well, I'll buy this house and my kids can live in it. I'm like, your kid is four. Like when they're 24, they may not want that. And you're right. So much life changes. So much life changes. So much life changes.

And I would rather you guys keep money building and building compound interests and working for you than not. So I would try not to touch as much as I can on that 1.2. But you guys are in a really great position, Kate. Like really, really great. You've done so many great things. And this is what it is, that you're living the dream. You really are. I mean, it's really great position, Kate. Like really, really great. Well done. You've done so many great things.

And this is what it is, that you're living the dream. You really are. I mean. It's a great discussion to have. It's a great problem to have. Like these aren't problems. Yes. So good.

Great job, Kate. Oh, that does it for this hour of The Ramsey Show. We'll see you next hour. Thank you.