The Ramsey Show - App - Why You Should Never Use a HELOC for Home Renovations (Hour 1)

Episode Date: December 13, 2022

Dave Ramsey & Dr. John Delony discuss: Why you shouldn't take out a HELOC for home renovations, Pulling from a TSP to pay off debt, Whether your loyalty is to your spouse or your parents, Knowing when to sell a rental property. 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 and Storage Studios, it's the Ramsey Show, where debt is dumb, cash is king, and the paid off home mortgage has taken the place of the BMW as the status symbol of choice. We help people build wealth, do work that they love, and create actual amazing relationships. Dr. John Deloney, number one best-selling author,

host of the Dr. John Deloney Show, and Ramsey personality is my co-host today. We'll be answering your questions about your life and your money. The phone number is 888-825-5225 ryan is starting off this hour in sioux falls south dakota hey ryan welcome to the ramsey show thanks dave it's honor to speak with you and john you too what's up i am wondering for my wife and i it now is a great time or is the right decision to take out a home equity loan to finish our basement and make substantial renovations to our house? We're not in the home equity loan business around here. We're in the get-out-of-debt business. So what makes you think that we would tell you to go into debt to do this?

Well, I normally wouldn't. But looking at the website and reading some of the information on your website, it obviously doesn't advise home equity loans. It does say, however, that if there was a time to do it, it would be to make substantial renovations to your home. I hope that's not on my website. On this website? If it is, I need to know where it is so I can punch somebody in the content team

and have that taken off. No, that shouldn't be on. I think you were reading Motley Fool. No, I promise. I searched a Ramsey home equity loan. It took me to RamseySolutions.com. It had a whole write-up on home equity loans, and it talked about all the negatives. All right, James, you can go ahead and pull that now so that we can get that pulled. I'm sorry. Apparently, there's someone inside this building that doesn't understand what we do. We'll

have to work on that. That happens sometimes. We hire new people, and they have to be trained. I'm sorry. You got bad information. No, we don't tell you to take out a home equity loan, ever. Wow. Never done that one time in 30 years. So, yeah, sorry for the mistake. That's awful that we misled you that way. Now, let's go back and try to figure out your problem, though, and solve it rather than just slapping around the issue.

How much home, what does it cost to do the basement and what's it cost to do the other revenue, the other renovation, two different numbers. And what do you guys make a year? Three different numbers. Uh, we, uh, it's kind of, kind of tough. I live in a commission based and I've been a company that I haven't worked a full year, but roughly take-home pay is around $125,000. The renovations, again, rough guess on just average square footage cost per square foot for the basement, probably somewhere in the $25,000 to $40,000 range, depending on what we'd want to do, and then just some other renovations um probably in the neck of somewhere 45 45 50 000 in addition to the 25 and 40 in the basement no no no no sorry so a total package somewhere in the 45 total package 45 000 top side uh of that uh 10 or 15 upstairs and 30 downstairs yep okay all right uh well let's just break this

project up into uh slices that we can eat that we can chew and save up the uh 15 000 and do the upstairs and then save up the 30 000 and do the downstairs do you have any money yeah yeah we do it was just more just again looking at the website the website. Do you have any money? How much money do you have? We're still in the process, and it wasn't necessarily like a due immediately right now. We have a little bit of debt that we're cleaning up. We're working the snowball. It was more just like in the next few months would this be something that we'd think about doing. No. So no, we don't have very much money because we are working the debt snowball.

Okay. How much money do you have? Yeah, right around that $1,000 emergency fund, and then we're cash rolling pretty much everything else to the debt. Okay, and how much debt have you got? We have just a little over $10,000 in student loan debt. Good. And then we have about a little less than $20,000 on just personal loan. Oh, so you've got $30,000 left to go,

and you're acting like that's going to happen in 30 seconds. So saving $30,000 to do the basement shouldn't take long either. Yeah. After you're out of debt. So, yeah. Again, I apologize for our website having bad stuff on. Did you find it? I did.

It just says, here's what you can use a HELOC for if you get one. It's saying this is what common uses are. It doesn't recommend it. It says it's debt right after that, and then it says why you shouldn't. Okay. So, it says on there not to do it, but it just says some people do this, but we say don't do it. Okay. So i guess it wasn't our our content people that get punched you misinterpreted the article okay yeah yeah that's good i feel better yeah i was all worried

because i mean you got a thousand people in the building sometimes somebody goofs up you know yeah absolutely um yeah it's almost like i he read into that email what he wanted i mean into that blog what he wanted yeah he wants to do this basement and i got a feeling he's gonna do it anyway yeah absolutely yeah that's the way it sounded um but here's the thing the answer to the question you need to always set um set the bar out into the future somewhere like and okay here's the bar i want to be wealthy i want to be and i want to be a baby steps millionaire so that i can be outrageously generous and change my family tree okay then once you say that then you say what is the shortest fastest most probable way for me to get there the highest probability in the shortest time for me to get there it's not borrowing on a

HELOC to do your basement right it's uh paying cash to do your basement and then you don't have the basement uh following you to work every day so to speak and so no uh and you've got you know the the same information that convinced you to get out of debt should have convinced you to never make this phone call because you should have been saying i don't ever want to go back in debt so something's broken here right and i understand i just did this at my house dave my back my back patio if you will it's it's a deck it was old it fell off i mean it was falling off the house and so i had kind of trashy it was i had to have somebody come out look at it and i said hey um there was an issue with the with the way they did the post on my front i have a long long front porch that goes across the whole front of the house give me a price on that too while you're

out here and they they looked at it all gave me a great prize great deal i had the cash to do the one on the back and he's like man i can cut you a deal i said i know it's great let's do the one on the back and i didn't like it and that I can cut you a deal. I said, I know, it's great. Let's do the one on the back. And I didn't like it. And that's what we had to do. That's the cash we had, right? And we got a great back deck. And now I've got a plan for if we're going to move on to do the front one. Yeah, fix the front porch eventually.

And here's what's funny. Now that I broke it up, it's going to be several years because it falls back on the priority list. But had I been doing this with a loan, let's go ahead and just do it all, right? I would have spent money I don't have for a project that isn't a do or die project right now. 100% of the time, whether you're buying a shirt, a car, a deck, a house, spending borrowed money activates a different place in your brain emotionally than spending your own money. Some people call it real money. Like when you're spending real money versus other people's borrowed money,

then you make different decisions. And it causes you to process these whole things differently. Who you hire as a contractor is even different. This is The Ramsey Show. guys we appreciate you listening to the show. Obviously, this is a service to you folks across America by YouTube, by podcast, by talk radio, and we are honored to do just that. If you want to help us out, we would appreciate it. You can do three things if you want to help us out. It doesn't cost you a dime.

Number one, you can subscribe to the show if you're a youtube viewer or a podcast listener just put it on your subscription it affects the algorithms and causes people to find us more often thank you for that you can leave a five-star review and remember my mother saying if you have anything nice to say don't say nothing at all and nothing at all is okay but five stars are better thank you and uh hey you can also share it with your friends tell them where you listen on talk radio or just hit the share button and share the YouTube link or the podcast link. And we really, really, really appreciate that. Todd is with us in Houston, Texas. Hi Todd. Welcome to the Ramsey show. Hi Dave. How you doing? Better than we deserve.

Merry Christmas. How can we help? Um, my wife and I, we, across your baby steps and baby step one. And yesterday I discovered that I have a thrift savings account that I have forgotten about for over 10 years. And I'm not sure what to do with it. If we withdraw it and throw it towards the baby step one and two or leave it there. How old are you? I am 37. Okay. How much is in the account? A little over $3,200.

Okay. Well, here's what's going to happen mathematically. If you pull it out, do you still work for the government? No. I was in the Army for nine years. Okay. I've been out for 10. Thank you for your service. Okay. So the proper thing to do is to roll it to an IRA because otherwise you're going to get a 10% penalty plus your tax rate. So you're going to pay 30 or 40% of this money

out to the government to get it out. So it's kind of like borrowing money. I could borrow 3,200 at 30% interest, Dave, and pay off my debt. Would that be a good idea? Answer is no, right? So in a sense, that's what you're doing. It's not a lot of money because it's not a lot of money. So it's really not that big a deal. But conceptually, I hate giving the government 30% of the money to get my money out. So instead, I would just roll it to an IRA with a good SmartVestor Pro. Just click SmartVestor Pro at RamseySolutions.com, and they'll help you get that rollover done.

Again, it's probably $1,000. It's going to cost you, and you'll get $2,000. So it's not like it's $300,000 that we're turning into $200,000. That would be an ouchy moment for sure but it is you know it is it is improper technique and so I'm going to be a legalist and even though it's a small amount just stick with it Scott's in Allentown Pennsylvania hey Scott what's up how you doing sir better than we deserve how can John and I help? Calling about a lovely mental and heart tug of war on putting myself and my wife and our future first to wipe out my mistakes of debt versus helping my parents who should be in near retirement, but basically not set a great example and they don't have their act together at all. Uh, so it's been a struggle

for me because I, my wife had no debt coming into our marriage three years ago. I do. And it's my responsibility listening to you to get it all taken care of. And then my, my dad's business failed and they didn't ask for help. But then I said, Hey, let me at least pay your rent this month while you go find work. You need to keep a roof over your head, dad, because that's what you taught me my whole life. And now I'm rolling into 2023. It's like, Hey, you know, I did a good thing. I need to go back to focusing on me. Happy wife, happy life. Um, yeah. So that's where I'm mentally and emotionally at right now. Are they still coming to you for money or you still feel like you need to feed them? No, they didn't even want that.

They said, no, we'll figure it out. We don't want to be a burden. I'm like, uh, you already are. So, uh, that was my choice volunteering. And I talked it over with my wife. She said, fine. If that's what you want to do for your Christmas gift for, you know, because we're married, she's like, fine, you can give them a month's rent, take care of it. I made them give me their landlord. So I paid them directly. And

that was just me. Cause I just, I was losing my mind and I just didn't want them. My parents on the street, my younger brother and I have agreed like, well, we told them this over the past three years that the business was going to fail and they didn't listen. So they put themselves here. So there's that tug of war of like. Here's the deal, Scott. There is no tug of war. The greatest gift you can give your parents long term is for you to take care of yourself now.

Okay. And if you continue to fight your wife and her, if you've been, how long have you been married? Three years years you said yeah or late bloomer i'm about 45 so that's all right that's all right um i'm just saying uh from a guy who's been married two decades if that's what you want to do is um spouse speak for stupid wow i wouldn't do that all right so worse than that she said oh we'll make that your christmas gift just to just to highlight exactly i don't agree with so I wouldn't do that. All right. So worse than that, she said, Oh,

we'll make that your Christmas gift. Just to, just to highlight the fact that I don't agree with. So you have played your, I wouldn't do that. If I were you card three years in congratulations, you spent it earlier than most of us do, but you'd have the greatest gift you could give your parents long-term is to,

is to be financially stable on your own. And you're not, you're probably not even close. I've been religious i just i shut down all podcasts the past three weeks and just have been catching up as much as possible because i used to listen to a year or two ago and then i stopped and now i'm like it literally flipped the the flip and switch in my brain and i told my wife this i said i've not been a good husband this i shouldn't even have debt right now i was like i should have had this paid off a year ago. This is ridiculous because she came from a family with intelligence of money. She has

no debt. Hey, listen, listen, listen. That's in your past. Who cares? You're here right now. What are you going to do tomorrow? Listening to a bunch of podcasts is a waste of your time if you're not acting. And you listened to a bunch of podcasts and got all fired up and then you sent your Christmas money to your parents. Yeah. Well, also also i also paid off a line of credit last month and just paid off half the credit card this month because i'm a very successful salesperson good so get after it get after it get after it get after it get yourself out of debt get yourself an emergency fund get yourself on the road to financial freedom yourself and then if your parents come to you and say, Hey, can you support us? And you sit down with your wife and y'all come up with, um, here's what our

boundaries are and here's what we're able to do so that we don't end up in the same situation. That's a whole, that's, that's a next year, year after that year after that challenge right now, right now, you got to get yourself stable. I love this. Now, how do you get the wife to my wife too? Because again, she doesn't have my mistakes. So her point is, well, and I guess like, Hey, we're in this together. Like I'm not, no joke. She's got a good amount of money and she's like, well, that was mine before the marriage, blah, blah, blah, blah, blah. And I'm fine with that. No, no, no, no, no, no. Then y'all don't have a marriage. Y'all have a business partnership. That's what it feels like.

But I want to bring it up. I'm like, am I being a jerk saying that? Like, I'm just trying to approach that in a teamwork responsibility thing. And I'm like, Dave, if we just have that one savings account, my mistakes are gone, and then I can just pay you back, pay us back. No, no, no. There's no paying back. There's no paying back.

So the old Book of Common Prayer said, unto thee, you know, for richer, for poorer, in sickness and in health, unto thee, all my worldly goods, I pledge. That was the old marriage vows. We quit doing those type of things a generation or so ago or two generations ago, and that was a mistake because the proper way to have a high quality marriage is to share your entire life right there's no hold back and so you're not going to sort of help her if she gets cancer right you're not you know and well you used to smoke so you're just going to deal that cancer thing on your own and you're not going to have to deal with that cancer thing on your own. And you're not going to do that.

You're going to go, well, I mean, the lady I married used to smoke, and now she's got cancer, and I'm going to take care of her. Richer for poor, and sickness and health unto thee, all my worldly goods I pledge. And so it's not the money, and it's not a penance for the past it's an indication of where the future is going that we're combining our incomes we're combining our assets and we're going to make decisions together from this point forward and we're going to take into consideration that she was has a natural skill or a family skill on money that's above yours and you've got some catching up to do on that skill, but you need to be sitting down doing that. If you can't do that, you guys need to sit down with a good marriage counselor

because you currently are operating like roommates relationally. This is The Ramsey Show. សូវាប់ពីបានប់ពីបានប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពី Thanks for joining us, America. This is The Ramsey Show. Dr. John Deloney, Ramsey Personality, is my co-host. All right, let's go to the psychologist, Dr. Deloney, before we do our next little thing here. I want to revisit the last call because it is a common thing out there for second marriages and late marriages have more trouble combining their finances than two 22-year-olds that get married. Because, number one, two 22-year-olds that get married usually don't have anything to combine.

But the other thing is there's no old dog trying to teach new tricks here. If you were burned in a marriage before, it makes it hard to trust again and um and if you um you know if you've lived independent and been responsible and saved up some money and then you marry someone who has not been independent and has not been responsible and has not saved up any money and is in debt i can see how you would resent that idea but the thing i don't get i can't get my head around is how that doesn't go with the marriage package like you didn't know you were signing up for this? You see it in later marriages where it's almost a compromise. Like I just want to spend time with you.

I like you. You're hilarious. You bring joy to my life. I want to spend time with you. I'm not going to do business with you, right? And I've got friends, like some of my closest friends in the world. I love them. I'd go to war with them. i ain't hiring them right it's it's kind of like that the when he talked the whole time i kept thinking oh she doesn't trust you and whether

she might love you she but she does not trust how you do business or handle money not not in a in an integrity way but she doesn't trust his financial emotional maturity. That's right. And giving money to the parents, who were also irresponsible, added to her suspicions. Out of guilt and all that. Well, I mean, she's like, this guy's not trustworthy. He does stupid butt stuff.

Yes. And that's what's running through her head. But there's a thing here that has to happen. In order to have the highest probability of becoming very wealthy, you've got to work together and combine. Right. All the data tells us that. In order to have a high-quality marriage,

you cannot operate two separate balance sheets it just does not lend us where your treasure is your heart is also and when you combine your finances you're essentially combining your life you're combining your future you're combining your dreams you're combining your fears and not doing that is sort of like uh you know i i'm going to just walk around an ankle deep in the pool of marriage. I'm not going to get in the deep water. It's just like going up to bat, and you're only putting one hand on the baseball bat when you try to swing it. You're just not going to be effective. That's a good one.

You're not going to be effective. And I think in this situation, it's a both-and. He needs to admit, the way I've done it doesn't work so we're going to follow a unified plan and i will commit to it and he said i'm a great salesman he's one of those he sells himself he's got yeah that's right a great salesman i'm a great salesman and one of the things i suffered with most of us that are great salesmen suffer with this we think we can out earn our stupidity and we're just gonna make some more money because making money is easy yeah but it's another

scheme another idea another but you know it's it's the way to fix this is i'll just make more money and it's and because i can always go do that and um you know i still have to watch myself on that after even teaching this for 30 years yeah i can just fix this i'll just go make some more money because i've always been able to make money but you know and so up until i was 28 years old i couldn't keep it at all i can get it it's like uh you had a hole in your live well man you could catch a lot of fish they just they just went right out the back of the boat yeah and we're shocked that when we open the thing up there's nothing in there we caught a bunch of fish where did they go? Yeah. It's like the whole thing just emptying out. So, yeah, I think, but the note is to those of you that are married late,

especially, or second marriages especially, or are considering that, you need to make this part of the deal. Not because Ramsey said so, but because it's best for your relationship and it increases your probability of wealth building you're going to have a higher quality situation all the way around when the dude in this case becomes trustworthy worthy of trust because his actions are honorable and responsible and mature and she quits treating him like a penchant little kid who is messed up and i'm going to withhold uh my checkbook right from this marriage right and that's going to require both people

usually to learn a new skill which is how to have a hard conversation yeah how to tell each other i don't know how to do this i'm not comfortable with you taking care of the money like instead of going if that's what you want to do and that's your christmas present yeah that that was very motherly yeah not very that was very like aunt susanee yeah that was not wifey that was motherly yeah that was like you're an idiot little boy just go ahead you're gonna make a mess spend all your money on mountain dew that's how you want to do it yeah that's that's what that was i've heard that tone a time or two myself so i literally hear that on a weekly basis and it's justified it's justified everything all right so these uh conversation cards have kind of caught on yes i got a memo today that now a

million dollars worth of them have left this building it's pretty wild and actually closer to a million two now of these things that you people have bought out there y'all are desperate for a conversation somewhere in america this is pretty amazing these things are popular john congratulations you have a hit and let me tell you the the the money's cool it's a cool indicator as you say it's just a way to keep score but the people send me photos of their thanksgivings, of their conversations, the multi-generational conversations. People out just having, I always talk about chips and queso and nachos on my show. People talk about, they have chips and queso and margaritas, and they got the cards splayed out on the table. It's just cool seeing people get together and be humans together.

Yeah. Questions for humans cards. Looks like a deck of cards, and there's one question on there for each human, and that how it works so we've got some we're going to play right we're going to play this is a friend's deck this is the brand new friend's deck we've got a second edition here so dave what this is incredible what are you ashamed to admit to admit that you let your pets do hmm i um i go on vacation with us i mean i don't yeah we take them to the we take them when they go with the dog it's a little shih tzu he goes with us but i guess that's kind of frou-frou i

don't know but i mean they don't like he doesn't misbehave and we just think it's cute. We're older than that. My first, my hound dog, hound dog that I loved with all my heart. I told my wife, she used to say, that dog was in your bed long before I was. But I used to let that dog, that dog slept on my pillow. With her head on the pillow. No, that doesn't happen.

No, we're not doing that. Not even the shih tzu. Yeah, not even anymore. I don't want the dogs in my zip code anymore. I'm too old for that crap. Grandbabies don't even sleep in the bed. They go, you know, much less a dog. What is something in our culture that's slowly being forgotten?

Grit. The ability to stick with something that's hard and not just abandon it at the first sign of adversity resilience i was gonna say um forgiveness and i was been wondering like what is what it is why can't people say the words i'm sorry or that was my fault and i think we've created a culture where it's one strike and you're out and you could have had a strike 10 years ago, 20 years ago, and if you are at fault for a thing, you're done forever. If there were cell phones when I was in college, I would be gone.

Dave, that was the rule. Because there would be pictures and video. That was the rule. Like, no cameras? What is wrong with you? No, I mean, oh would oh no that's not good at all we had actual film being that guy at walgreens back in the day or eckerd's remember that store back in the day yeah whoa look at that who would have thought what item have you

held on to that's not worth much money but it's priceless to you. Tools. Old family tools that actually you don't even use them anymore. Yeah. But it's tools that like my grandpa would have used and that kind of stuff. And they're actually, they're not even, they're on the shelf in my office because they look cool and they're old and they mean something to me. I don't even keep them in the toolbox in the garage anymore. That's incredible. Yeah, that's fun.

Hey, check them out. Questions for Humans. We could have gone for a long time. Yeah, we almost did. Go get them at RamseySolutions.com. Yeah, you can get them. They're only $10, so no purchase necessary. Jump in there.

Oh, and sign up for the free giveaway. That's what there's no purchase necessary for. There is a purchase necessary to get these cards. This is the Ramsey personality, number one best-selling author, and the creator, with a little help from his friends, all of the Questions for Humans cards on sale now at RamseySolutions.com. And a great addition for the holidays. We were just sampling them for you here a few moments ago if you missed out.

So it's a lot of fun. It's a good way to strike up something that doesn't have to do with politics or COVID. Be nice to have a conversation that didn't include either one of those with the family. Ever again. During the holidays or with any human ever the rest of my life. That would be great. Except I do want to remind you that back in, no, I see, there you go. All right, Anna is with us in Washington, D.C.

Hi, Anna. Welcome to The Ramsey Show. Thank you so much for taking my phone call um and i am definitely going to buy several of those question for humans um cards now now that i hear a sample of this so thank you for that well thank you um i have my question is my husband and i we have two houses. One is our primary house. And the second one is our old house that we rented out for two years now. And, and my question for you is, should we keep our rental house as a investment or should we sell it and basically pay off our primary residence? We have 50% equity on both houses. Both mortgages have 3% interest rates. We have no other debt. We have a six-month emergency fully funded. Kids college and 401k is funded to the max.

So what should we do? Should we keep it as investments or should we sell it and just pay off basically 90% of our debt? Yeah. Neither one of these answers falls in the dumb column, okay? So it's just a matter of good or better and best or something like that. Yep. So one thing that does enter into this, I think you're probably still in the window to sell the former residence and qualify for a half a million dollars of gain tax-free. If you wait another year, you won't be able to, because I think you've got two years to do that.

Can't be rented more than three of the last five years or something like that, whatever the number is. So check your tax advisor to be sure. But that would enter into the equation for me because I can free up a half a million dollars if i do it now tax free uh so that that's handy if you wait a little while that change you know then then we've just got an investment property versus your residence so uh what i personally would do because i have enjoyed the peace that comes when I don't have a single payment in the world, and I've enjoyed the ability to build wealth rapidly when I don't have any payments. Because of that, I think it's a shortcut. I've lived it.

I know it's a shortcut to sell it and pay off your house but if you work to pay both of them off in the next five years you're not dumb it's just a matter of better or best so i think best is that when you take a gulp of air it's going to go all the way to the bottom of your lungs when you don't have a house payment. Okay. Does that make any sense? Yeah, it does. That's why I'm asking you because my husband and I were trying to figure that out because, you know, if we sell it now, then we don't have to deal with the taxes.

But if we keep it, then we have to keep it for the long haul. Yeah. You're going to be landlords forever. And, I mean, you've already had tenants in your old house that's an emotional event oh well they just move and that's why i'm calling you because now we have an opportunity no i'm just saying other people moving in where you used to sleep and live and raise your kids and your dog is just weird i've got one i got one of my old houses we used to live in that we rent and it's still and there's another house uh two blocks over that's almost identical that we rent that we own and i don't feel any emotion about it and i still if the guy doesn't park his car right on

the one i used to live in it pisses me off still i mean it's just weird you know it's kind of it's kind of awkward does that make any sense it does um but i love going back to my own neighborhood and seeing my old neighbors yeah you can do that without a house yeah that's true all right and i like everyone who calls into this show that is not everyone most people call in the show who are landlord folks um are and dave tell me if i'm wrong here but they're when they are into the real estate game and they want to be landlords they're all in i rarely hear somebody that's like i don't know um it's too hard to screw with if you're halfway it sounds like she doesn't want to be a landlord she just doesn't want to sell that old house no she doesn't

want to do something dumb though and you know your friends are going oh you always want investment real estate everybody knows you want investment real estate because everybody is foolish but everybody knows nothing that's what everybody knows but yeah so be i mean that's what you hear is street knowledge just people you know your beautician has an opinion while she's cutting your hair you know it's everywhere you know and so doesn't happen to me but but uh but i mean you know the guy changing your role has got investment advice these days so they saw something on tiktok so they're dadgum expert you know and that's they're everywhere that's the that's the thing you have and about real estate you know you always are taught to buy real estate you're never taught to sell it

buy always buy investment real estate always buy buy a house. Always buy. And nobody talks about selling real estate. And there's sometimes it's a really good time to sell some real estate. Really, really good time. Jake is with us. Jake's in Orlando, Florida. Hi, Jake. What's up? Hey, good afternoon. Thanks for taking my call. Sure.

I had a game plan I wanted to run by. I know I can count on you to tell me if this is a stupid butt idea or not. I love you, and I'll tell you the truth. Yes, sir. Absolutely. Got $50,000 in consumer debt. I've been putting back this last year for retirement.

I've got about $50,000 in retirement accounts. I've got $220,000 in retirement accounts. I've got $220,000 in student loans, and I have a house that I could sell for roughly $5,000, and I owe $280,000 on. That's your personal residence? Yes, sir. You're a doctor or a lawyer? I'm anesthesia. Good. Pharmacist, yeah. Okay.

Thank God. So you're making what, a quarter million? Base is 190 with overtime is 260, 270. Almost like I've done this before. Okay, yeah. Right. All right, and what does she make? She stays at home with the kids. Okay, cool.

I've got a five-year-old and a three-year-old. Okay, what's your plan? So I'm thinking about taking the, what's in their retirement accounts, wiping out the consumer debt, uh, and selling the house and wiping out the student loans, uh, renting for a year, saving the 20% for the next house and doing things right moving forward. Uh, I don't, I don't know if it's a quick hit reset button or suck it up and buckle down and focus. Yeah, I got you. Well, I appreciate your motivation.

You're willing to do whatever it takes. That's pretty cool. Not many people are. Yes, sir. But you don't hate your house and neither does your wife. We love the house. Okay. Okay.

So I almost never sell the house, if I can avoid it, as advice. Okay. If you can't afford it,, if I can avoid it, as advice. Okay. If you can't afford it, we're going to get rid of it. If it's the only way to avoid bankruptcy, we're going to get rid of it. But in your case, you have this huge hole that you're in, and you have this fabulously large shovel. Right. So, no, in order to keep the house, though,

the family's going to commit to a couple of three years of beans and rice and no vacations no lifestyle we're not living like a rich doctor because we're not we're a broke doctor right so no and you never cash out your retirement to pay off debt unless it's to avoid bankruptcy or unless you have you know two million dollars and you're 68 years old you don't have any penalties we might do it then but not now we're not doing this with penalties so stop adding to retirement get on a beans and rice budget the two of you commit to completely cleaning up all of your 270 000 worth of debt with your 250 000 income so let's say we did 90 a year that's three years yes sir and that's what i would do if i woke up in your shoes uh because it sets you free for the

rest of your life then uh to to invest and with this fabulous income and your income is not going to do anything but go up you're not been out that long and how old are your kids again uh five and three perfect so let me tell you on the back end of this, what this looks like. Your two little kids are going to get to watch you struggle and make do and y'all make dinner at home even when you're tired. And they're going to take some incredible lessons from this. They're going to change them forever. And so I would tell you, don't rob them of a three-year learning opportunity, watching their dad and mom do really hard things so that their future is different. To clean up your mess.

They get to watch these things and be great. And you can always sell the house if you have to, but you don't have to. This is The Ramsey Show. Hey, it's John Deloney, co-host of The Ramsey Show. Did you know over 18 million people listen to The Ramsey Show every week? A lot of those people listen on one of our 600-plus radio stations across the country. To find a station near you, go to RamseySolutions.com slash show.