The Ramsey Show - App - You Are in Control of Your Own Future

Episode Date: October 22, 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 amazing relationships. I am Rachel Cruz hosting this hour with my good friend and bestselling author, Jade Warshaw, and we are here to answer your questions about life, money, career, anything and everything. So give us a call at 888-825-5225. Up first this hour, we have Chris in Raleigh, North Carolina. Hey, Chris, welcome to the show. Thank you. Thank you for taking my call. Absolutely. How can we help? So I'm asking this question for my daughter and her fiance. And I wanted you guys to give your best explanation of

why you should not buy a house together before you are married. Oh, I like that. So, I mean, the first thing is there's no legal protections. I mean, you're kind of just his word against her word and you're commingling money together. And so at the end of the day, if it doesn't work out, there's not really a process in place to decide who gets what. That would be my first thought. Okay. So with you saying that, of course, nobody goes into a marriage thinking that it's not going to work out, and these two are no different. But they both still live at home. They both have jobs.

She's in college, and she's finishing up a teaching degree, which is going to take her three years to do that, and they're scheduled to get married in April of 26th. They're trying to understand how you wait until you're married to buy a house, because they say, well, where are we going to live at? Well, that's a good question. And I tell them, you've got to look at renting. And if they decide to wait, I want you to explain to them why that's a good thing, I guess, is what I'm saying. To wait to get married or to wait to not buy the house together?

Wait to not buy the house together. I think they understand the finance part of it. But I think they're like, if we don't have it when we get married, we don't have nowhere to go. So that's what I'm kind of getting at, wanting them to understand and hear it from somebody else. Well, there's two conversations, I think. There's the value side of it, and then there's the money side of it. So on the money side, yeah, we don't recommend combining money until you're married. So up until this point, they should be viewing her money as her money, his money as his money. So her money is used to buy her rent, her food, pay her bills, that sort of thing, and vice versa for him.

The moment that they start combining it, it just becomes kind of a web together, which when you're married, it's a good web. But when you're not married, it's a bad web because if something happens and they end up not staying together, then that's a lot that has the ability to be lost. Right. Would you agree? Yes, I would agree 100 percent. Yeah. Well, I'm sorry. Yeah, no, it's fine. Right would you agree Yes I would agree 100% Yeah and then Well I'm sorry Yeah no it's fine and when you own something With someone and this is even a car Chris

We would say this about a car when both of your Names are On the ownership of something to Detangle that Is very difficult to do and when you have An asset like a house It's very difficult and then I would say To them as well financially speaking they're just Going to be out of school they don you have an asset like a house, it's very difficult. And then I would say to them as well, financially speaking, they're just going to be out of school. They don't,

they can't afford a house anyways. Like the upkeep of home ownership already is going to add stress to their life and they don't need that, right? Like that, that's down the road. And we want that to be part of their plan long-term, but it almost kind of steals a level of joy and freedom. Like when you can just rent and everything's taken care of for you, like enjoy your early 20s. Don't, you know, if you're in a place financially that you're settling down and you can buy a home and can afford it,

that's one thing. But when you're first starting out, like understand that, you know, it's very, very expensive. So on that end, Chris, it's very unwise, very unwise to put your name together when you are not married on an asset. Because just like Jade just said, untangling that, it's a mess.

It's an absolute mess. And then a house is magnified in that. That is not a wise move. And then you have the values conversation. And again, people can do what they want to do and believe what they want to believe. But I think there is something to be said about acting like you're married and pretending like you're married when you're not. You're not married. And there is a level of something sacred to say, hey, I'm going to join my life with this person under a vow and under a covenant. And we are going to then merge our lives together and actually do this life

together. And there's something that nowadays you know, nowadays it's just like, you know, you gave it all away right up front. And it's like, man, there's just something about saying we're going to do this in a order that, again,

some would say is old fashioned, but I think is wise because it actually gives you options. And too, Chris, I've talked to so many people that, you know, they live together and worse,

they have a house together and they're not like, oh, I don't even know if i want to marry this person and the long you know creating this timeline of the breaking up lasts so much longer versus like hey we're just trying to figure this out and it's not working and it's so much easier to cut ties with people i think so that point what i think's going on here is there there's a lack of foresight obviously because they're thinking under best case scenario.

And that already is a red flag to me because the truth is life happens. You don't know what life's going to happen. So having the right protections in place is important. The other thing is I think that this is more out of convenience than anything else. I think they're trying to create a certain level of convenience instead of living their lives as they are. How old did you say they are? They're 20 now. Okay, they're 20 now. So yeah, I feel like they're going, it's just easier to do it like this as opposed to taking the smarter route and the more independent route. Does that

make sense? I mean, I know this is not for you, it's for them, but. Absolutely. That's why I called because what you said is right on the money, and I can't wait for them to hear this. Well, let us know how they take it. I hope they'll take it from two ladies who, you know. Yeah, for sure. And it's a hard thing too, Chris. I mean, granted, she's 20, so I do feel like you being able to speak into her life.

You know, the door's starting to close, you know, with her becoming an adult, but it's still open, hopefully. But also knowing that, you know, as your kids get older, and especially when they start entering adulthood, the conversation does look different. The tone you take, the perspective you take.

And I would just say to you, Chris, that, you know, as much as you can, the biggest way to influence, I would just say to you, Chris, that as much as you can, the biggest way to influence, I would think her as a 20-year-old who's in college, knows what she wants to do for a career. She's obviously very smart and she knows a path that she's walking down.

But to engage this conversation as much of an a friend aspect than like, I'm a dad, I'm going to tell you yeah what to do i just feel like you start to get to that age in the late teens early 20s where it's like the persuasiveness of a parent comes into play much stronger than i can control you like when you have like a three-year-old and you're like this is what you're gonna do but some of it still gets in like truth truthfully i remember when i was in my 20s I was dating this guy and I remember my dad telling me

he was like Jade like before you go too deep into this just know like your tastes change like what you want changes over time and I think he told me something like what you want's gonna change like five or six times so and I mean it was weird because he was like you know you were dating this guy and you thought and then you were dating dating this. He's like, this guy's like number four. Like you might change your mind again. And as at the time I was kind of like, Oh, this guy, dad doesn't know what he's talking about, but he was right. Yeah. And so there's part of it. I'm like, you're 20 years old. Don't get me wrong. Some people, they marry their high school sweetheart, whatever. I'm not saying against that, but there is a part of it that that is such a growth period for most of us. Oh yeah. You change so much from 20 to 25 even.

Right, right. And so there's part of that where it's like, you guys, you don't know what's going to happen in the future. Yeah, yeah, yeah. And you certainly don't want to be like locked into a financial asset like a house. Yeah. That might make you feel trapped.

Yes. Let the timeline unfold naturally, right? And let the turn of events, the order of events play out in a natural way versus trying to force it and rearrange everything because it's just going to make it more difficult. Hope that helps, Chris. Thanks for the call. This is The Ramsey Show. Hey, you guys. Health insurance costs are only moving one way, and that way isn't down. And if higher costs aren't enough, the wait times to see your doctor are longer, and it's harder than ever to get

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So listen, y'all, there's no better way to take care of health care costs. CHM programs start as low as $98 a month. So learn more today and join at chministries.org slash budget at chministries.org slash budget. Welcome back to The Ramsey Show. I'm Rachel Cruz with Jade Warshaw, and we are answering your questions at this hour. Up next, we have Elizabeth in Grand Rapids. Hey, Elizabeth, welcome to the show. Hi, how are you guys doing? We're doing great. How can we help? I have a question. So my husband and I decided that I'm going to become a stay-at-home mom once we have kids. And right now our take-home pay and our mortgage, our mortgage is about 25% of

our take-home pay. If I stop working, it goes up to about 50 percent of our take-home pay for his take-home pay for our mortgage. Yeah. And we're wondering, should we pull back on retirement to pay down on the house or should we keep our retirement at 15 percent and just do the best that we can for the next year or two and recast or refinance the house as we can? Are you are you expecting now? No, I would like to get pregnant maybe sometime. I would like to have a baby in my arms in like two years. I'm a bit of a planner. I'm here for it. That's great. That's great. Okay. Yeah. So if the time came, would you guys have some time to kind of, you know, mitigate some of this?

But I mean, if you were to call us today and said, hey, I'm choosing to stay home next week and I'm not going to be working anymore. My first question would be, is his income at all going to be increasing significantly in any amount of time that you see in the foreseeable future? And if the answer was no, then I would say you probably have too much house. And you guys are, that's part of the, you know, the give and take of making these life decisions is that you can't afford your house on one income. But you guys are two years out. So there can be possibly, you know, again, some planning to go along with this.

Tell me again what baby step you're on. I guess technically six, but if we were to try to pay down our house more than we go back to two um and we also have three months of emergency fund and i would want to bump it up to six yeah before i stopped working yeah i think that's a great idea bumping the baby the the emergency fund up to six months um how much do you think that you could what do you owe on the house now? And what do you think you can knock it down to? Like, what's the, what's the timeframe on getting this thing paid off? We owe about three 50 on it right now. We just got it. Um, and I also just

found you guys a few weeks ago. Um, I think I, I think we could bump it down maybe like 50 to six, uh, 50 to 70. Um, and my husband's wondering if we knock down our retirement he thinks we have enough in retirement to knock it down long term to pay more on the house just so we have more options we have about uh 210 000 in our retirement accounts not including any hsa and you're he's saying instead of investing 15 like we would teach, what's his thought there? Bump it down so that our house is 20 until our house is 25% of his take-home pay. Yeah, I don't agree with that. I think that it's really important for you guys to build because for you, this is a long-term decision. You're not saying, oh, I'm just going to stay home for a year.

It sounds like you're wanting to stay home indefinitely. And so the fact that you guys would bump down your retirement contribution long-term, that does bother me because I want to make sure that you do have enough there when the time comes. I think the issue here is you have two places you can look. One is income. Is there anything else that he can do do is there a pathway for his income to go up and the second place is the house because living at 50 living with your house at 50 is not sustainable like you have stars in your eyes now and i get it staying home with the baby is wonderful um but let me tell you when you're strapped and you're also staying home, that is stressful. Yeah, I would also have the option to work part-time, but it wouldn't be super sustainable. I'm an engineer who can do consulting work. And then my husband and I are also graduating with our MBAs soon, which we paid

for in cash. So we don't have any student loans. So his income will definitely go up over the next two years. I just don't like relying on your imaginary numbers. What's the amount you need to get it to 25%? Like what's that magic number? If it were a refinance, depending on if interest rates could get down to like five, five and a half percent, if we buy down points, it would be about $50,000. And if we were doing a recast, it would be closer to 70. No no i'm talking about in your monthly budget what's the the dollar amount that you would need for this to be the right ratio like how much income per month we would need um right now our income is at eleven thousand dollars and so we would need to keep it at around eleven

thousand dollars because our mortgage is about $2,800 a month. $2,800, okay. And what I'm getting at is your income is going away. How much of it is that? Oh, I'm six of that 11 take-home pay. So you need $6,000 added back to your budget to make this right, or you need that amount monthly eliminated from your home payment?

Yes, that's the answer i'm saying that you either need to replace the six thousand dollars with him and you combined some way or you need to find a way to cut that from your existing budget whether it's from the home payment or something else because this has got to balance, right? Yeah, but we only spend his income right now. And so we have my income every month to put into Roth IRAs, savings accounts, or pay down the house. Yes, but that doesn't change the equation. The fact that your mortgage would be 50% of all of that. Because the thing is, the things that you're saying that would go to the wayside, those are very important things. I mean, you've got to save for retirement and you've got to have extra margin. Without it, you will be living paycheck to paycheck indefinitely.

Elizabeth, you guys are getting MBAs right now. Will his income go up? Did you guys get those degrees knowing that there's opportunity that you're going to see some ROI on those degrees? Do you see opportunity that you're going to see some ROI on those degrees? Like, do you see him and his income drastically increasing? I do see it happening in about two to three years. We are still relatively young. So obviously an MBA doesn't, you know, fix everything. We're only 26 years old. So management positions don't really happen until you're, you know, in your late 20s, early 30s. Totally. Okay. So yeah, I would say two things, Elizabeth, for you. I appreciate your planning

and looking so far ahead. I really do because I think it does give you some peace just to be like, hey, and my piece of encouragement, number one is you never know what's going to happen. You never know between now and two years. I mean, who knows, Elizabeth, you could look up in three months and be like, well, got pregnant, didn't mean didn't mean to or you know you guys can have a totally different journey to walk down you know like people can change jobs there could be someone sick in your family you end up moving like you have no idea in two years so I would give yourself a lot of grace in that I but again I appreciate the planning but just know a lot of things can change from jobs location income family status all of it in two years.

And then the other thing I would say is just kind of paint some best case, worst case scenarios and just say, okay, realistically in two years, here's probably what he's going to be making. And here's how much we can pay down the house between now and then without sacrifice. I know that the sacrificing the retirement, I kind of, I hate, I would hate for you guys to do that but if you choose to do it for two years you choose to do it but I probably wouldn't um but just I don't want to yeah just yeah so I would just do a worst case scenario and the worst case scenario Elizabeth as you get pregnant you have a baby you can't afford your house you move to a smaller house that's right you know what I mean like it's just like at the end of the day I know the housing market is so stressful there's so much that goes on I don't want to make light of that

but also it is just a house. Like you guys could look up and make a different decision because value based decisions on your life and you guys as a couple is going to give you more peace versus staying somewhere like just pretend you don't want to work and you're staying in a job just to pay a mortgage. Well, that's going to make you bitter at the house. Like that's not a that's not a great way to live so free yourself up from that but that may mean some give and take of freeing yourself um from this asset and changing it up a little bit but to get ultimately what you guys want so um so again i i the time frame there's a long time frame here

so give yourself grace there and then always know you can make different decisions. You can. You're not married to this house even though it feels like a big investment. Yeah. But you can change it. You guys can. But it's hard and I think that's one thing

that, you know, why we talk about money on this show so much of the conversations, it is not just about the money. It's not just about the percentages of the budget. It is what you all want as a family.

And I'm talking to you all as listeners and viewers. What do you want for your life? And money is a tool to create that. And there's going to be some give and take. And I know two friends and they're both lawyers. They work crazy, but they make great money. They go on great trips with their family. The way they've set up their life is what they love.

They're passionate about it. And it's great. And then, you know, I had another friend and she quit her job, similar to Elizabeth. And they had to move probably 15 minutes, you know, outside from where they were to be able to afford and not be stressed. But that's what they chose. You get to choose. You do.

So, you know, being an adult, you have to figure out, though, from a value standpoint, what do you want your life to look like? And then use money as a tool to get you there. There's a time in your life and the baby steps for renting, but you don't want to do it forever because when you rent, you're still paying for a mortgage, just somebody else's. Plus rent means instability in your budget because it always goes up, never down. So when you're ready to buy, make sure you work with a mortgage partner you can rely on, Churchill Mortgage. Churchill is Ramsey trusted to help you make the move from renting to home ownership wisely. Churchill

understands that when you buy a home the Ramsey way, your mortgage payment will be a consistent, manageable part of your monthly budget. Plus, when your home is paid off, that was your largest expense. Now it's extra money in your pocket and an asset towards turning you into a baby steps millionaire. So get started on the American dream of home ownership today at churchhillmortgage.com. That's churchillmortgage.com. This is a paid advertisement. NMLS ID 1591. NMLSconsumeraccess.org. Equal housing lender. 1749 Mallory Lane, Suite 100. Brentwood, Tennessee 37027. Well, this March, I can tell you where Jade and I are going to be. We're going to be on a cruise ship with the Live Like No One Else cruise. We're both going to be there

as well as all the Ramsey personalities, including Dave. Dave will be there as well. And we are celebrating you guys. So if you are on Baby Steps, four, five, six or seven, and you're out of debt, you have your emergency fund,

and we always say around here, you live like no one else. You sacrifice to get out of debt you have your emergency fund and we always say around here you live like no one else you sacrifice to get out of debt you sacrifice to get that emergency fund you sacrifice to get that financial foundation under you that is so hard it's it's not fun but man once you do it then you get to really enjoy your income and you get to live like no one else and that is what this cruise is all about So the dates Are March 22nd Through the 29th So a full week And more than 90%

Of the cabins are full So they are They are getting taken Every day Every day they're selling So make sure you guys Jump on To RamseySolutions.com

Slash cruise And reserve your cabin today And this is a really nice Cruise ship I was laughing Because someone was like Oh gosh What kind of ship is it It's ship I was laughing Because someone was like Oh gosh What kind of ship is it

It's nice I was like Let's be honest If Dave and Ken Coleman Are going somewhere It's going to be a little bougie It's going to be a little bougie So this is a very nice

Very nice ship And we're going to Turks and Caicos Puerto Rico St. Thomas The Bahamas I think Winston's going to come For about half of it

Same My family too Good So we'll be there So make sure to check it out Again, there's fitness center, pickleball courts Spa, excursions Some great entertainment

Like Trey Kennedy, the comedian's coming Dina Carter, Stephen Curtis Chapman So it'll be fun And we'll be teaching too Throughout the week So different things when it comes to your money And your life and your mental health And your marriage and all of it.

So there'll be some really good content too. And you'll have a boat full of people that think and live just like you do when it comes to money. We'll be best friends with all of you by the time it's over. That's right. So go to ramseysolutions.com slash cruise and we would love to see you there.

All right. Next is Garrett in Phoenix, Arizona. Hey, Garrett, welcome to the show. Hi, how's it going? Thank you for taking my call. Absolutely. How can we help? So I'm looking for advice on how to not make any major mistakes. That's kind of going to set my family back as we're preparing for some big changes and just trying to avoid the advice that comes from like social media. Okay, that's good. What are the big changes? So I used to be the sole income person in my house and my wife was a stay at home. We have four kids and she stayed at home. She homeschooled our kids, but we have swapped so that I could go back to school and I could get a degree. And we're kind of approaching the end of that. Like I said,

she went back to school. She's working as a teacher, but I'm about ready to finish that upcoming in May. And we're just kind of trying to plan. We currently don't really, our only debt really is our mortgage. We don't have any student debt. We've paid everything off for my schooling. We paid off of her schooling. We have no credit cards, no car debt. We're really not in any kind of debt.

We do have our six-month emergency fund saved up. Nice. I just don't know where to go from here because we don't owe a whole lot on our home. But I also, I'm a little bit older, a little bit later in life, and I don't know how much I should be focusing more on retirement or I should be focusing on home. And I just get a lot of mixed signals online. Well, this is kind of similar to the last call we took. So the way we teach in the order of baby steps, technically you guys are on baby steps four, five, and six. So you have no debt. You've got six months of emergency funds saved. So right now you should be investing 15% every single month off of your gross monthly

amount. And so once that's kind of going and it's, you know, you don't touch it, then you can say, okay, do we want to put anything in, you know, 529s or for college savings for our kids, educational savings, and you can decide how much that is. And then whatever is left after that, you can say, okay, what does it look like for us to start working on this house? And that could look like, I don't know, at the end of the year, we'll get a bonus and that goes towards the house. It could be a monthly amount that you set that you both have agreed on. There's really no rules on exactly what that looks like. The biggest rule to keep in mind is that we don't stop baby step four to do baby step six. That's really the crux of this. Yeah. So what are you going back to school for?

I'm currently in school for nursing. Okay. So tell me, give me like, what are we? It's October. Give me October of 25. What does life look like? Have you graduated at that point and working? Yeah. So yeah. So I'll be graduated at that point. I'll be working. There's like an entry level salary. And then eventually at some point it will go up after that, but I'll be full working. And then my wife could or could not be working depending on how, you know, intense we're trying to hit the mortgage or save up for retirement. Okay, perfect. So how much do you think you'll be making out of school?

Somewhere between 80-ish, right around. That's a good guess. No, it's like probably more like low ball. Yeah. And what will she make teaching? She makes about 50 teaching. Okay, so great. Okay. So when that time comes, you guys will kind of just reevaluate, hey, how fast do we want to hit these financial goals? Maybe she works another two to three years. Maybe she doesn't. She just goes home. What will the kids do if you guys are both working full time? We get a lot of help, but we probably would have to do something at that point. We've been getting help from grandparents and from different friends that have been helping us to kind of keep the homeschooling because we really value that. So if we had a goal in mind, which is kind of why I'm trying to develop a plan now, if we had a goal in mind, then we can say, hey, for the next year, we're going to work to do X, whether it's retirement or it's going to be the mortgage. And then we can kind of reevaluate at that point.

But with no goal in mind and just kind of hitting the minimums of the 15%, which we are meeting, we're above that. And then also just kind of sitting there on the mortgage, it's hard to say, hey, can people keep helping us out? So we're trying to find a balance of like, where do we shoot for? How do we start planning what our kids do? Totally. So I would give you this is my thought. And Jade, you could you could have a different opinion on this. You know, when you're in debts and you don't have any savings, your like priority is to get yourself financially in a place where you can breathe and sleep at night. Right. Like that's that's the value, in my opinion, because it makes everything else then kind of fall into place when financially yourself financially in a place where you can breathe and sleep at night, right? Like that's the value, in my opinion, because it makes everything else then kind of fall into place

when financially you're in a good spot. And you guys are there, Garrett. So in a way, I almost would flip it and say, what do we value? We actually value homeschooling and we don't want to piecemeal friends and grandparents for the next four years just to pay off the house.

Maybe this is what we value. And then now we value that. So now with my income, we're going to map out how long will it take us to pay off the house. And then from there, if it's, I'm just making up numbers, if it's eight years and y'all are like, oh, gross, we could really do that in four if we sacrifice two years of you know her teaching but I almost would start with what you guys want your life to look like because we just talked about you live like no one else so later you get to live and give like no one else and you guys have the ability

Garrett to create a life that you want right now and then from there set your goals versus letting your the house payment drive if your wife works or not. Or maybe not. That's how I am. But some people are more money focused where they do flip it. But nothing's on fire. There's absolutely nothing on fire here. I feel like you have an urgency that's like, I love that you're thinking about this, but I don't think that it's necessary to have that level of urgency. I think something that probably could help you is you said you're investing more than 15%. My guess is that if you backed that down to 15%, you'd be able to do both comfortably, do your investing and as needed, throw a little extra on the house. But the key word here is just

about being intentional. And I think that there's a way where you can do the homeschooling on less income. You're still investing 15% of whatever that income is. So you know that you're building the retirement that you're going to need one day. And you also know the house is going to get paid off and it's going to be paid off in less than 30 years and it's going to be paid off in less than 15 years. And that's pretty awesome. I really appreciate that advice. Yeah. And go to ramseysolutions.com, Garrett, because we have an investment calculator and maybe you've already done this, but plug in some numbers from the retirement side and say hey this is probably what we're going to want uh to live off of in retirement you can kind of just i mean it's probably more of a guess but

and then back yourself out and say okay are we are we making putting enough away for retirement and then same with the mortgage calculator and just say run both scenarios that if she works for you know one two three four years how fast can you pay off the mortgage versus if she doesn't work at all and see how those numbers sit with you guys and because your whole life has to go into the context of this as well um from the kids and the homeschooling and all of it and what you guys want out of your day-to-day life too because you're past the sacrificial lifestyle um from the early baby steps and you guys really have set yourself up really well to have some of these options.

And the encouraging thing too is, Garrett, I was just running numbers for this talk I'm doing for our Money in Marriage event this weekend. And even an extra, on a 30-year mortgage, one extra payment a year decreases it by almost six years and you save like 80 grand in interest.

Like one payment a year extra does that. So I can't even imagine, Garrett, if you guys were like, hey, maybe she does something part-time and we have a goal to throw three payments a year. You know what I mean? Or whatever it looks like. But it's kind of a game that you guys can sit there

and just, I don't know, kind of move the numbers around and see what gives you some peace in this because you guys deserve it. You've worked hard. You've set yourself up well. So enjoy that. Thanks for the call.

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download the CFO's Guide to AI and Machine Learning at netsuite.com slash Ramsey. It's free at netsuite.com slash Ramsey. Welcome back to The Ramsey Show. It's a free call at 888-825-5225. And we are answering your questions about life and money. I'm Rachel Cruz, hosting today with Jade Warshaw. So give us a call.

All right, up next, let's see if I can get this right. Life and Money. I'm Rachel Cruz, hosting today with Jade Warshaw. So give us a call. All right, up next, let's see if I can get this right. Mahea? Mahea from Honolulu, Hawaii. Welcome to the show. Hi, Rachel. Hi, Jade. I appreciate your time. You're welcome. Did I butcher your name or did I get it kind of right? No, Mahea. Yeah, you got it on the nose. So good. So good. Well, thanks for the call. Oh, sure thing. I'm just calling. I've been listening to you folks since the beginning of the year. At that time, I had a baby. So I was kind of waiting a little bit before getting gazelle intense and just kind of starting now.

My question is, is it okay to do baby step three before baby step two if you live in a high cost of living area? And if not, what is your reasoning? That's a good thought. I mean, I think that there's a reason that the baby steps are in order. It's because you're going to be most efficient. Because here's the thing, as long as all of your money every month is going towards payments, it's going to take longer and longer for you to save that three to six months of expenses. Right. And so the idea is we want to be able to move quickly. And does that that that's the first part of that. And so having a thousand dollars saved, I get it. It's it's it's it feels like it's not enough. It feels like you need more. But the key thing to remember is that that part's temporary. And so just know if you put the thousand dollars there, you start paying off the debt and

something happens and you dip into the thousand dollars, you replenish it and then you're quickly back into it. Okay. What do you anticipate happening? Because my screen says, can I do this first? I'm in a high cost of living area. And what that tells me is you're thinking it's high cost of living. Maybe every once in a while, I'll need to dip into this just to live. Whereas the emergency fund is truly, truly an emergency. So what are you thinking might pop up that's causing you to reevaluate the order? I guess what makes me hesitant, my husband and I just bought a home late last year. And as soon as we moved in, you know, there were some things that needed to be

fixed up. And I guess just to have a thousand dollars in savings makes me a little hesitant, you know, seeing as you can't foresee, you know, what can happen or any issues that come up. Yeah. So there's part of this where as much as you can think ahead and project the future, it's a good thing. So for instance, if I just if I put myself in your shoes and I said, OK, I have debt, but I just purchased this home. Let's say the house is on the older side. There is part of me that I'm going to go, OK, how many years do we think we have on the roof? How well is the AC and the heating doing? Is there anything that I can see that's probably gonna crop up in the next year to two?

And if that's the case, I'm keeping that in the back of my mind and knowing, okay, this could come. But knowing that will also help me know, okay, if there's nothing that I can see, if I'm just kind of projecting something that's not even there, then I'm gonna go ahead and hit play full speed

on baby step two. The next question is what's really the timeline? Because if you're thinking, because a lot of people think that it's going to take them longer than it actually does to get out of debt. If you're thinking this is going to take me six years, of course, a thousand dollars isn't enough, but let's see what the real numbers are. So how much debt do you have? I just have, we have our mortgage and I have a car loan for $17,000. Okay, $17,000. And what's you guys' income? Combined, we make about $180 a year. So you're telling me that this car is not going to be done in one year and that $1,000 won't cut it for a year? No, that's not what I'm saying. I'm just saying that it makes me just kind of want to

cruise up my emergency fund for the next 10 months and then pay off the car. Listen, you can do what you want to do. But if you're asking me, I would tell you, I'd say, hey, clear out this car. You're eliminating risk. That's the true elimination of risk from your life. It's not having debt. So go ahead. Go ahead, Rachel. I feel like you're going to say something. No, yeah. So I feel like you're going to say something. No, yeah. So I mean, that's what I would do. And usually if things come up like a house repair or something, that's when you can pause the baby steps,

save up the cash and do the repair. You know, for some of it, it's not, you know, you'll get a bill 30 days later or whatever it is. So you'll have that time if something big does come up. So we do say to pause the baby steps and the debt snowball. If something does come up, you can always pause it and put some cash aside. But overall, yeah, knocking out with $180,000 income, knocking out a $17,000 car loan, I would do that ASAP and I would throw all the money I have at it to get it paid off as quickly

as possible. Because again, it's going to continue to take longer to save up that baby step, baby step three. It'll take you a bit to do that while you're still paying a payment and paying interest on that payment mathematically on something that's going down in value. And that's where, you know, yeah, eliminating the risk of not having any debt, it's worth it. That's the baby step two, baby step three thing I feel like is, I don't want to say it's a difficult one for people, but I do think people question, why would I do this first? Most people say, I value security. And because I value security, I want savings first. To which my thought is like, well, what's going to make you feel more secure? Because

the truth is, if the worst happens, you get laid off, you lose your job, something happens, and a spouse is unable to work or you're unable to work. What truly makes it difficult is finding the money to make all your payments. That's who's calling you. 1-800-PAY-ME is saying, I want my payment. That's what's making it stressful 1-800 pay me is saying call i want my payment that's what's making it stressful but if you can eliminate payments then if something were to happen let's say you just were debt-free tomorrow right and then you lost your job well at least it takes probably 50 less to make your household run yeah than it did before so i want to eliminate like what's inflating my lifestyle and what's inflating what

I have to spend every month I want to get that down and mitigate that risk and then it's like oh suddenly then what I even need to save in order to cover myself for three to six months goes down yes because my cost of living has gone down and so when you think about it like that it's like okay when I had debt it costs us eight thousand dollars to make the the household run if I eliminate the debt it costs four thousand dollars to make the house run which means if I need three you know three months of expenses only twelve thousand dollars so yes that is kind of at least the way my mind works when I do this and um yeah what's the real risk if something were to happen yeah yeah so it's good all right next, we have Jenna in Indianapolis.

Hey, Jenna. Welcome to the show. Hi. Thanks for taking my call. Absolutely. How can we help? So we're debt free. And I was wondering,

should we borrow from our 401k to help purchase our next home or our replacement home, I guess I should say. Yeah. What's causing you guys to want to borrow off of that versus just saving up for a down payment or using the equity in your current home?

So, well, we were hoping to sell our house. And then in order to purchase, we made an offer on a home. And so, yes. So we and we don't think we're going to get as much for our home as we were hoping. And so then to make up the difference, we were thinking we could borrow from our retirement. Wow. Okay. So it wasn't like a contingent offer. It wasn't based on your house selling for a certain amount. It's contingent on our house selling, yes. And what's the difference?

Like how far were you off? It would be, well, we'd be able to borrow up to $44,000 from my husband's 401k. So it probably wouldn't be that amount. It'd probably be close to $30,000 that we would need to borrow. So you were $30,000 off in what you thought your home was going to sell for? Or did you kind of know going in? We were off because of that. Does that change?

Realtor fees and things. Okay. Yeah, yeah. Well, my question is, number one, would you not just roll that $44,000 into just the mortgage that you take out? But if you do that, does the math still come out well for you guys from like a monthly payment percentage and everything? I just want to make sure you guys can afford this house without having to borrow in your retirement. So our house that we live in is currently paid off.

We paid it off in 2020. Oh, wow. Okay. That's great. So we'd be taking all of that from the sale. And then, so we don't want to take out a mortgage, I guess. Okay. So like we could, and we'd be qualified to do it, but we'd rather, if we did have to take out a loan, you know, if we borrowed just from ourselves. I hear you. I hear you. The least amount of risk is for you to take out the small mortgage.

Yeah, for sure. Because if you have a 401k and you guys somehow leave that job, that's the very first thing they're wanting. And you're unplugging completely, you know, the machine of the retirement. So no, I would take out a small mortgage and pay it off fast. But well done, Jenna. You guys are doing great. And you could actually go to our real estate home base at ramseysolutions.com slash real estate. And there's so much information on there when it comes to mortgages, paying your house off and all of it. So make sure to check it out. Thank you, America, for listening. Thanks to all the guys in the booth and you, Jade, as well. This is The Ramsey Show. For free tools and resources to help you reach your home goals, go to ramsaysolutions.com slash real estate or click the link in the show notes. Live from the headquarters of Ramsey's

Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I am Rachel Cruz hosting this hour with my good friend and bestselling author, Jade Warshaw. And we are here to answer your questions. So give us a call at 888-825-5225. We'll be talking about your life, your money, your jobs, your family's relationships. So give us a call. All right, up first this hour,

we have George in Los Angeles, LA. Hey, George, welcome to the show. Hi, thank you for taking my call. Absolutely. How can we help? So I have $148 thousand dollars in debt right now and also my wages are being garnished already i've been sued um from a loan i didn't pay they're taking 25 of my income every week um every two weeks so i'm just taking a lot of money uh i make about 9090,000 gross.

I take home about $75,000 a year. My wife recently started working. I'm doing everything I possibly can to take more income, everything. But I'm already up to the point where I'm kind of thinking of filing bankruptcy or selling my house. So I'm thinking, what's the better option? Either sell the home or file for bankruptcy. Okay, so tell me, what's the debt, either to sell the home or just file for bankruptcy. Okay. So tell me what was, um, what, what's the debt, the 140? Uh, basically it's three loans, three personal loans. Uh, they're, uh,

one of them's 50,000. The other one's another 50. Another one, uh, is 40. Um, one of them's 20,000. One of them's a car, but I'm thinking, I'm still, I want to pay the car off. So I'm not going to put that one. The $20,000 is the car? Yeah, one of them is $20,000. That one's still good. I'm paying that one off. And the other is just all personal loans. What were the loans for? What'd you use them for? I got hurt a long time when I was working and I needed a couple I needed some money just just to stay afloat my mortgage so I just took out a lot of some loans and just kept paying it off but then another one I took out to consolidate debt and ended up just splurging the money didn't really do what I had to do so when does your wife and then when does your wife start adding to the income? Because you're making around $6,000 a month.

I started working like four months ago. And what's she making? About, I would say, $1,600 a month. Okay. Okay. What is she doing? Job-wise? She just works at a veterinary place.

Okay. Do you guys have kids? Yeah, I have two. You have two, okay. And which of the loans are the ones that are garnishing your wages? It's just for a bank. It's the personal loan. Is it one of the personal, one of the $50,000?

Yeah. Okay. And are both of those personal loans with the same bank? No. No, okay. And have you been current on the other $50,000 loan? No, I haven't paid anything to anybody for a while already. Okay.

Okay. And so you've got the house. Everything's in collections, basically, so you've got the house everything's everything's in collections basically except the car and the house so they're they're taking almost two thousand a little under two thousand dollars a month right garnishing from you yeah and then yeah what percentage of your mortgage is what percentage of your take-home pay is your mortgage uh i pay 1800 a month for my mortgage okay okay um oh boy all right um yeah we need you're not able to do anything here um okay so the key here is we've got to find a way to get more money coming in

and i'm wondering with the garnish if is there any way that you can say, can we set up another payment program because this one is like burying me alive? I've tried everything already, spoke to lawyers. I've done everything on my part to make some adjustments. I've done pretty much all I can do. Even if I get another job, they're still going to garnish. So at this point, I'm already maxed out. It's just I don't see another solution. They're just not budgeting at all. How old are your kids? One of them's eight and another one is five okay um is the five-year-old in kindergarten is anybody in daycare is what i'm getting at they're both being homeschooled oh that's right

okay it okay um there's part of this that and you you and your wife are going to have to sit down i mean you're pretty much up against it and you could use all of the the money that you can get um right is there any way that because i i don't know i'm not going to pretend to know a ton about homeschooling but i know that there's some programs where even though they're not going into school they're going into a program that's outside of your home like a co-op like a co-op type situation is there a way that you can still keep the value of homeschooling, but it's not your wife that's actually doing it so that she can work? Full time. That's something I haven't thought about.

And I'm not saying forever, but I think that you're in a, your back is against the wall. And unfortunately, when that happens, something, you have to let go of something, something has to change in order for you to change your situation. And usually that is a sacrifice of some nature and there's just no getting around it. But I'd rather you keep control of this situation once you and Rachel, you can speak more to this. But once you hand it over to bankruptcy, you lose control.

And I don't want you to lose control of the situation. I want you to make every choice and feel like you have a say in everything that's going on. Okay. For the house, George, give me some of the numbers around that. How much do you owe on it? How much is left on the mortgage uh the house is right now 390 is what we owe and five it's worth about five almost six hundred thousand almost six hundred okay um you know the car i would probably i would sell the car ge I would probably, I would sell the car, George. I know you're making payments on it,

but that's something that can easily be swapped up to earn some money and margin back into the budget that you can go back and get later after all of this. But again, back to that sacrificial mindset, like what can you scorched earth do to have any means to be able to get ahead on some of this because some of it is in those in collections and keeping a car payment afloat um is something that i i would because i mean everything else is is in collections and if you get on that i don't want even you know

being repoed on like i don't want anything like that like you're in a little bit of that situation that again back to that control that Jade's talking about. How much could you sell the car for? Have you Kelly Blue Booked it? Yeah, I think I could sell it for maybe $18,000 around there. Okay. And I owe about $18,000. So I could break even on that one.

It's just, you know, I mean, that's not, I mean, I guess I could do something like that. I mean, what's the payment on it? It's just $500 a month. That's a lot. Okay. I mean, $500 to have that freed up is a big deal. And if you are upside down, like this is one of those cases, if you're upside down, you go down to the credit union, get a loan for the difference and a little bit more in order to get yourself a beater if you need it and i'd rather have a five thousand dollar loan than a twenty thousand dollar loan agree all right plus you freed up five hundred dollars you know a little bit less than that a

month when you take in consideration the new payment um yeah you're gonna have to make some tough choices mama's probably going back to. You're probably getting rid of this car. And you might have to consider what's the equity. And a part-time job. And then the house, yeah, could be in play. But I just want your habits to change as well, George. But you guys got this. This is The Ramsey Show.

I've been doing this show for over 30 years. And some of the saddest calls I have taken are from situations that are completely preventable. Yeah, and what's so hard is I feel like one of those, especially the ones that I'm like, oh, it's terrible. People that call in and their spouse has passed away suddenly and they don't have life insurance. When you have to think through how am I going to pay my bills. I'm going to eat next week. Yeah in the middle of all that grief like it's just it is it's terrible. So life insurance is the one thing especially as a mom with three little kids that I'm like so big on for people to get because it's inexpensive. Zander is the place that Winston and I actually get all of our life insurance. And it doesn't cost much because Zander shops among a gazillion different companies.

It doesn't cost much. You just have to admit that someday you're not going to be here. You got to say it out loud and you got to say, I'm going to say I love you to my family by taking care of them and taking the time to put this stuff in place. The cost of stinking pizza. To get a free quote, call 800-356-4282. That's 800-356-4282 or go to zander.com. Today's question of the day is brought to you by WhyRefi. Private student loans are different than federal student loans like Sally Mae, but they can hurt just the same. WhyRefi refinances

defaulted private student loans and builds a custom loan based on your ability to pay. So stop feeling the pain of defaulted private student loan debt and go to yrefy.com slash Ramsey. That's the letter Y-R-E-F-Y dot com slash Ramsey. May not be available in all states. All right. Today's question comes from Justin in California. He says, I've been working hard to save money for a house. My wife and I have no debt and have a six-month emergency fund. So far, I've saved $175,000 for our down payment. We have a combined income of $140,000. We live in California and are looking at houses in the $650,000 range. I want to save more so that we can put more down on the house. My wife has been asking me to buy her a diamond ring that costs about three thousand five hundred dollars i am holding off on buying the ring

because we can use that money to pay for closing costs should i buy a diamond ring for her or wait until we buy the house this is wild um i'm assuming that the diamond ring is not like an like a wedding ring or like, I'm assuming it's just a gift that she wants. Right, right. Um, yeah, I think based on what you've laid out here, I would have loved to hear her side of it. But based off of what you've laid out here, it sounds like you have decided that the priority

is the house. And at the end of the day, you both need to sit down and re-talk and say okay what's more important us trying to get into this house because if I buy this ring this is how much it sets us back so yeah and I would want to know the time frame on how much like how how many months or how many I mean like just to know like how what is this setting you back and is that are you are you okay with that both of you yeah and I do think it's okay. And Rachel, you can drop in here. I think it's okay. Like as a couple, when you set a focus and you're going towards that thing and as the time passes, other things crop up and you're like, oh, that could be cool. Or that could be fun. Yes. And I do think it's important to have

those conversations and decide, are we realigning back on what the goal was? Or are we going to divert here for a moment because at the end of the day it is your life and you get to decide you know how how urgently are we moving that's right and i don't know if this diamond ring was something you've been promising her maybe you guys got engaged and you never got her a ring i don't know any of that but have the conversation but it sounds like the house is what's most important and i would say you know the down payment, you guys are, you know, above that 25%.

Yeah. So I'm like, you're in a good spot for the down payments. You know, like it's a, I don't know, you have a lot there percentage wise for what the house is worth. So how much would 3000 really set you back? But also I'd want to know from her, like, you know, What's this about? And I do, you know, don't get me wrong.? But also, I'd want to know from her. What is this about?

Don't get me wrong. I love jewelry. I love shopping. All of it. But also, you're like, okay, what is that going to get me in the near term? Right? Maybe God or just like a band when they got married and always promised her like an actual like diamond ring.

I don't know. That's valid. If there's something there um but i would want to see time frame how long this would set you back to the goal that you want to have for your down payment on the house that's what i'd be curious about hope that helps justin all right up next we have hayley in omaha hey hayley welcome to the show hi thank you for having me today It's such an honor to be on the show. Absolutely. Thanks for calling. How can we help? So my parents took out a universal life policy on me when I was born, me and my sister both.

And now that I've turned 21, I have the option to continue paying those payments for the universal life policy or cashing it out at the cash value and giving that back to my parents and and just moving on for the future oh you have to give it back to them when you cash it out yes is that what they said yeah okay How much will it be? It's just $750 for the cash value. Okay. I'm just curious because you said you have the option to keep paying on it or cash it out. Yeah. So that's interesting to me that you would keep paying on it and then, but if you were to cash it out, you have to give the money back to them. This is very odd. Either way, i would catch it out and get out of that yeah how old are you hayley did you say i'm i'm 21 21 okay so the difference between what they have a universal life policy is similar to it's like basically a whole life policy and you're paying probably four times the amount than what you would pay for just a

standard term policy because what you have pay for just a standard term policy. Because what you have, this universal life, what they basically pair is this like investment savings account with life insurance. And what ends up happening when you pair and marry those two products, you kind of get crappy on both, especially the saving side. So the rate of return usually within these policies is like, it's terrible. You could do better in a high yield savings account, much less like actually investing your money with the 10, 12% return that the market brings. So the savings investment portion sucks on these, and that's the selling point. So always remember this, Haley, going

forward into adulthood, that you want to keep your insurance and your investing completely separate. Never combine them because when you combine them, you're not getting the best of both worlds. You're paying more for a policy and you're getting a crappy investment with it. So like it's a horrible product and a lot of parents, yeah, you took it out when you were born. I mean, that's the Gerber life insurance. I mean, like all these companies go and they do this, you know, these policies for babies. And why you need life insurance too, Haley, is if someone is dependent upon your income.

So if I were you, Haley, I would cancel it, say goodbye to the $700, give it back to your parents and live your life. Don't be paying monthly on this. And then when you need life insurance aka when Usually when you become a parent or Even if you get married You know and someone is dependent upon your

Income to live the lifestyle that you Guys are living then I want you To go mention that I could Have this policy if I were to like Pass away and then someone were to have to pay For my funeral cost so that's Why this policy is around like $25,000. Sure. Okay. Well, I think you would recommend having savings for or a policy for the purpose of insurance is for people who are dependent on your income. Typically, when you

have life insurances in place, it's because like, for instance, I have life insurance in place because my family depends on my income. My husband has life insurance in place because my family depends on my income. My husband has life insurance in place because we depend on his income. We have children. And so if one of us, God forbid, if something were to happen, the family will feel that. And so we say, let's have this policy in place so that if the worst happens, everybody who depends on this income will be set, not just enough to pay for funeral and burial costs, but they won't have to worry about money. That's the blessing that can come out of a really tough situation. So in this case, your parents having a policy on you was completely, truly unnecessary. Yeah.

And the funeral costs, you know, idea funerals, they are getting more expensive. But at 21 years old, I would not have the burden of feeling like I need to have savings for my funeral. Right. So like that, I would not add that into the conversation some people may be like that's irresponsible but as a 21 year old your parents will take care of it if something were to happen to you Haley so yeah I would not be paying monthly into something just for that and that is a selling point they say too right like that's right to cover the funeral and all of that so so again Haley when you get in a position in life,

though, that you need life insurance, remember term life is going to be your best friend. And the earlier you get it, the younger you are, the healthier you are. It is like, it is so inexpensive. Even for me, I'm in my late thirties and it's still inexpensive at this point. I mean, like it is, it is a fraction of what you pay with whole life. So. And the coverage you get for that is so much better. Yes. And for term life, it is for a term of your life, right? Whole life is for your entire life.

Term is for, you know, a 20 year, 30 year, whatever policy you buy. But as you're doing the Ramsey Baby Steps and you're walking through getting out of debt, you have an emergency fund in place. You're funding retirement. Eventually, your house is paid off. You know, Baby Steps millionaires are doing all of this on average in about 9 to 12 years, doing everything. And at that point, you're self-insured.

If something were to happen to you and there's no house payment, there's no debt, and you have, I don't know, 300 grand and a 401k or whatever it is. Like, you know, everyone's fine. So you won't need life insurance for your entire life if you're doing the Ramsey way when it comes to your money, which is what we recommend. It's a great call, Haley. Great question. Whole life, universal life. It's like the spork.

It's a spork. It is. It's not really a fork. It's not really a spoon. Yeah. And if you go to Zander. It sucks. Zanderinsurance.com, you guys.

Check out Zander because you're able to get a quote so quickly with them. Just to even see and compare maybe the insurance that you all have that are listening or watching. And maybe you can get a better deal because they go and shop many companies. And it's a great, great company. So check out Zander. When it comes to looking at your insurance, Ramsey Trusted Pros shop the market and they compare insurance quotes so you don't have to. And your pro will compare quotes, discounts, and bundle deals for you at no extra cost.

So make sure to check out our Ramsey Trusted Pros because they will have everything you need when it comes to the coverage of the insurances that you need to have and they are interviewed they are vetted they are coached to make sure that they have the heart of a teacher if they're going to be ramsey trusted so shop all the right coverages that you need based on your individual needs you can go to ramseysolutions.com slash coverage again that's ramseysolutions.com slash coverage. Or click the link in the description if you're listening on YouTube or podcast. And check out that coverage checkup because, again, as you kind of fill it out, you're able to see, okay, maybe I'm paying for insurances I don't need. Maybe I have some and I haven't checked on them and I can run some new numbers and maybe get a better deal. So make sure to check that out.

Again, you guys, ramsaysolutions.com slash coverage. Up next, we have Kion in Houston, Texas. Hey, welcome to the show. Hey, how you doing? Doing great. How can we help? Yes. So almost about a year and a half ago, my parents had separated.

And now my mother's currently raising my little brother who's autistic uh on her own she's on government assistance like social security and i'm just trying to figure out like you know how to go about like helping her because i try to like give her like advice is like going back to work and stuff like that because you know she's only making like a thousand dollars or something like that a month so i'm just trying to see like like how do i help her because i'm currently in debt as well and you know it just hurts me to see my mother and my little brother in that situation because they have an apartment and everything but he constantly you know like asking me for money and stuff like that so it's kind of hard to give it to her when i'm currently in like the same situation getting out of debt so that's right

yeah i'm just trying's right yeah what kind of advice could I get well Keon you're you're an amazing human being you're an amazing guy um your heart and the fact that this is even on you is um is incredible so how how old are you uh I just turned 25 25 okay how old's your brother? He's nine. Well, he'll be nine next month. Okay. Okay. Is he, does he go to school full time?

Yes, he goes to school full time. Okay. And your mom, have you, what's the situation with your dad? They just separated, I know you said, but is he in the picture at all or child support or anything? Right. Like, that's the thing. Like, there's no child support in place. It's almost like she'll tell him what he needs to pay and he'll pay it.

So they created a plan, but sometimes he doesn't always follow through with that plan. Sure. Like, they'll get into an argument and then the next following week there's no payment or you know the other week it'll be a payment it just depends on his attitude or their relationship at that moment. Yeah yeah you said she's getting government assistance and then you said that she's making a thousand dollars do you get the sense that she's kind of limiting her income so that she can keep getting this government assistance or do you feel like she's just not sure what she can do to make money? She's sure. I'm positive she's sure.

I think she's more limiting her income just to maintain that because she doesn't want to go back to work because she had left work, I think, like two and a half years ago because she had vertigo. Okay. But, you know, I always tell her, like, go back to work because she seems fine, you know? Like, there's no issue with her mental or anything like that.

It's just... It wasn't something that caused her to be, like, on disability. Right. This was... I mean, at the time, it was, you know, due to the headaches and stuff like that, so she just went ahead and took that disability leave. But now she's doing fine from what I see.

But she says, you know, she still has those moments. Is there something, so maybe you can help her brainstorm a job that she can do full time. Maybe it's a work from home position. Maybe it's, because here's the thing. Here's where I'm at. I ordered a chair from wayfair it didn't work out i sent it back and i called customer service and every bit of the customer service

was via text so my point is there's jobs out there for people who might not be able to exist in a typical work environment is what i'm saying um so i think I, yes, yes, go ahead. There's, there's two parts of this. The first part is your mom is grown and you can't necessarily change her. And it sounds like you've been attempting to say, mom, what about this? Mom, what about that? And that's probably one of the hardest things to accept as a child. And especially as a grown child, the next part of it is I would choose if I were in your shoes, Keon, I would choose to focus on my financial situation because what we teach here, the seven baby steps, the budgeting, all of it is there's

a so that at the end and you get to choose what the so that is. Some of it is so that I can retire with dignity. Some of it is so that I can find fund missions, you know, in Africa. So if that so that for you is, man, I just want to be able to help my mom out with my brother. And I want to know that I have the cushion to be able to do that. And it's all a gift. I don't need anything in return.

Let that be your why and let that be your motivator. And that way you can happen to this situation instead of waiting for somebody else to change. Exactly. You know, because currently, like, my dad, my sister, my mom, my little brother, and even my other distant brothers, none of them have money or anything like that. So I just feel like I'm the only one that's seeing this opportunity to change because everyone kind of thinks the same as far as like, you know,

And if you change that if you change that they're all going to look at you and be like what did he do what's he doing but right now since you're all since at eye level it looks like you're all kind of doing the same thing you've got you've got the information you're still putting into practice but once that actually starts to develop fruit and people can see oh wow they're going to start asking you how did you do it and you're going to have the opportunity to teach wow, they're going to start asking you, how did you do it? And you're going to have the opportunity to teach. But mostly they're going to learn just by watching you. Yeah.

So, Kiana, I mean, I just started. I just started the whole process of getting out of debt, the baby steps and everything. Like I'm on baby step one. I have five hundred dollars so far. Good for you. It's great. Yeah. Well, I would echo what Jadeade would what jade just said though

um kian that putting your energy in trying to get your mom to see a certain way um ends up being wasted energy even though it feels like love it feels like oh i can help her and i think we all have this feeling of like if we could just have that one conversation and like say that right sentence the light's gonna go on change the light's going to go on. The light's going to go on and I'm going to be able to help them, you know. And I'm not saying abandon your mom and relationship by any means, but the energy that you would put and maybe you have one big conversation just to check it off your list from a soul level, just to say, I tried one last time. But I would, I would take all that energy, Kian, and do exactly what Jade said.

Control what you can control and what you can control is you and what you do with your money. And I'm telling you, at 25 years old, Keon, if you get this and you say, I'm going to walk this path out, you're going to retire a millionaire. You're going to, I believe, change people's influence. And exactly what Jade said, not even by saying anything, but the people that want change around you are going to see you actually have hope in an area that's been so hopeless for them and see something different and probably start asking, okay, what is going on? You know, we say that part of this whole process is changing your family tree, you know, winning with money. It's not just for you. It is really to impact and to be generous

to other people. And part of that generosity is the beauty of your influence, of people around you and your family seeing something different. And not all of them will choose that path, right? That's right. Like all of us sitting up here, like not everyone chooses that path. But you have the ability to do that. And I do think, you know, having some goals ahead and kind of painting out a timeline to say, OK, by the time my brother is, you know, 12 years old, I want to be able to help in this way and that way. And I want to help my mom not enable and making sure that the, you know, whatever you choose to go forward of helping them, that there's some boundaries. It's a very mature adult-like, you know, system that you may get plugged into in a really beautiful way. But to really let that help them and help your brother,

I mean, this could change the course of not just your life, Kian, but your family's. It's amazing. Yeah. Well, I'm excited for you. I currently have a daughter now, too. So that's even more reason to, you know, start this whole plan to be successful. That's right.

When you're in these situations where everybody's kind of had the same mindset and it hasn't gotten you very far and you finally pop your head up and go, it's time for me to do something different. It literally is that quote where you have to be the change that you want to see. And the moment that you become that change, it gives everybody around you hope that they can be that key on hold on the line christian's going to pick up and we're going to give you financial peace university and every dollar premium just to help you get kick-started on this journey because we're cheering you on call us back if you need us thanks for the call hey you guys i'm not a fan of the big banks, and you probably already know which ones I mean. But I do like credit unions because they're nonprofit organizations that focus on their members. And I'm proud to endorse Fairwinds Credit Union because they share the Ramsey mission of helping people get out of debt and live generously. In fact,

they design products to help keep you from going into debt in the first place. Fairwinds has been in business for over 75 years, and they serve hundreds of thousands of members worldwide. You can feel secure because your deposits are federally insured by the NCUA up to $250,000. It's easy to join and Fairwinds partners with more than 5,000 credit union locations around the country so you can bank in person wherever you live. But if you prefer the online experience, you can log on to Fairwinds and do anything you could do at a physical location. So go to fairwinds.org slash Ramsey to learn more.

And while you're there, look at the combined checking and savings account bundle they created just for Ramsey fans to help you take control of your finances. That's Fairwinds, F-A-I-R-W-I-N-D-S dot org slash Ramsey. Welcome back to The Ramsey Show. I'm Rachel Cruz hosting today with Jade Warshaw and we are answering your questions. Up next we have Kayla from Medford, Oregon. Hey, Kayla. Welcome to the show. Hi. Thank you for taking my call. And also, thank you for everything that you do.

Oh, thank you. I appreciate that. Well, we're glad you called in today. How can we help? So my end goal is to sell my house so that I can move to another state. But I told myself I couldn't do that until I was debt free and then I had a fully funded emergency fund. So I was wondering if I could get some help brainstorming ideas on how to get out of my house for the most amount of money. That way I can pay off as much debt as possible. Oh, I like this. This is giving like,

I don't know, an HGTV vibe vibe so how much debt do you have kayla so i have 144 000 and that's not including my mortgage okay what's the debt in the debt is in 19 600 is a credit card okay 96 400 are personal loans that were for the remodel. Oh. Yeah. So you already started a remodel? I did, correct. Okay. And then what else? And then my car is 28,000. My car is currently for sale online. Okay. So hopefully I can get rid of that pretty soon. Oh, great. How much do you make a year? I make $102,000 a year. Okay. Is the $19,000 on credit cards, did that go towards the remodel as well?

Yes, about three quarters of that is for the remodel. Okay. So the house itself, what do you think after the remodel and everything's done, yeah, what will you sell it for? Do you know? I don't know, and I think that's part of the problem. Another, right now it's currently a two bed, one bath. My idea was to turn it into a three bed, two bath, because that'll let me sell it for at least a hundred thousand more than what I can now, but I'm done taking out money to fix the house. And so I

feel like I'm kind of stuck where I'm at. Well, let's work it back. So what'd you buy the house for? I bought it for $325,000. Okay. And then you've put about $120,000 into it? Yes. Okay. And then when it's all said and done, just based off of basic research you've done, what do you think it should sell for? So another two-bed, one-bath, same condition, closed in the same area, closed about a month ago for $325. That one also did not have a garage, and I have a two-car garage. And then it looks like another one sold for $315,000.

The house right next to me, my neighbors, they sold last year for $500,000, but it's also a three-bed, two-bath and over 1,000 square foot bigger. So I wouldn't come close to that. The hard part for me is I'm struggling with the numbers because unless you've paid off a bunch of this that I don't know about, what do you owe on it currently 315 okay I'm not seeing how this is gonna unless it brings

500 like you like you think it could but you said that that's not an equal comp how much will you need more in the remodel to make it the um three bed two bath that that you started right i mean this is what the the almost hundred thousand dollar personal loan was the construction to do that is that right yes okay so how far how far are you with that i barely even started so it doesn't even have the extra bedroom and bathroom yet that was just doing the garage doing a bunch of outside stuff adding a porch concrete so I would probably need another 20,000 maybe to add in a really basic extra bedroom and bathroom okay have you already done like demo work inside

already because that was your plan or that hasn't been touched? It's just two bed, one bath right now with really nice concrete. Yeah. So I haven't done anything, anything. Okay. Okay. That's good. That's good. Because if you're in the middle of something and it's like, oh my gosh, we have to put drywall up. Like we have to do this as cheap as possible. But nothing interior has happened, which is good. Because you're right. I don't want you going more and more into debt, hoping that you're going to be able to see the resale value. Because I think you're getting yourself underwater kind of kind of quickly. Yes. Okay, so I think you have to proceed very carefully because you're

right against it right now like let's say you did those changes you sold you're 315 now is what you owe um let's say you did sell it for 500 after closing costs after everything like that and we're not even including like moving fees or like getting into another house and you wanted to pay off all of your debt, which is 144,000, I mean, you're right at it. Well, and 500 isn't gonna be, I mean, that's a thousand square foot bigger. That's what I'm saying. Yeah, yeah, yeah.

So you're not gonna get that. So you're probably gonna get closer to 350, 375 with some of the upgrades that you've done. So if that's the case, yeah, I mean, you may break even, Kayla. I hate to say it. I don't know if there's equity in this to be the thing to help get you. Because you were hoping to get $100,000 more, but you've already put in more than $100,000 extra.

Yes, which is definitely unplanned. Once you start doing something, things just start adding up. I've had to replace water lines and so many unforeseen things. And so it kind of got out of control. Yes. Yeah. Rachel is more of the flipping queen than I've never flipped a house. So I'm not going to act like I have. I just watch the shows and I know how to do math. So that's where I stop. Rachel could tell you if you need to keep going to like make this right or not. I can't in good conscience tell you to keep borrowing money on something like this, Kayla.

I mean, if I were you, yeah, I would lose it because you're wanting to move states, right? Like you're wanting to get out. Yes. Right. I don't have a i don't have a timeline though so the good thing is i can wait one or two years oh so yes so i don't have a timeline so i thought maybe do i just stay put and just work on paying down the debt yes or yeah that's what i would do i yeah okay instead of the instead of the remodel being the thing that like

breaks you free i think at this point you cut your whatever losses or if you're breaking even whatever that is, you just stop and go, okay, this is the house. Finish whatever project you are right in the middle of, you know, to the best of your ability. And then, yeah, pay off your car, you know, get it to the point that you're able to get out of this house. You're not losing money and you can start your new life somewhere else. Yeah, I would start working my way out of debts just from work. I wouldn't look at the house as being the thing that's going to help you do that. And what's wild is, you know, I mean, who knows what's going to happen? I mean, the market could go up and you could actually, you know, be better off in a year because, you know, your house overall will continue to go up

in equity, which is great great and maybe at the end of the day you know you sell everything you're debt-free you sell the house maybe you know you cash in I don't know 50 100 grand that can help with the next move and and you kind of cut your losses that way um but I think looking I understand what um how you got there thinking okay if I put some money into this I'm going to be able to, the value of the home increased so much that the difference is that's going to help me pay off

all this consumer debt. So like I understand how you got there. It's just that the math now isn't mathing because it goes fast. And that's the hard thing about remodels and flips or that whole world and people make it seem so easy on Instagram and on social media.

But it costs a lot if you're not careful and if you don't know what you're doing and especially if you're handing the keys over to other people saying okay you do this you do that you know the concrete guy comes in at one bit the roof for another I mean like it just it can build on each other if you're not really careful that's why I don't think it's a great business for people to be in unless you really know what you're doing. So I totally get how you got there, Kayla. But if I were you, I would press pause. I would not put anything else into this house unless you had the cash to do it. Yeah. How much more painful when you go into debt and it doesn't. That's right. Yes, totally. Yeah, that's right. That's right. So I would, I think, you know, selling your car is going to feel great. And I think you make a great income.

And maybe, Kayla, I would even say this, that if it gets to be a place in your life that you're like, man, I kind of want out. If we talk to you October of 2025, and you're like, man, I still have 30 grand of debt left, but I kind of want to get out, then you can move still. You don't have to.

Yeah, being debt-free is not a prerequisite to moving if you need to, right? I would just rent at the next place. That's exactly right, for sure. Well, Kayla, I hope that helps. Sorry, I wish we had better news for you, but thanks for the call. Now, if you guys are listening on YouTube or podcast, make sure to head over to the Ramsey Network app. If you're listening on traditional

radio, we are still here for another hour. But again, the Ramsey Network app is free. Thanks, Jade, for being a great co-host. Thanks to all the guys in the booth. And thank you, America. This is The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I am Rachel Cruz, hosting this hour with Jade Warshaw, and we are answering your questions. So give us a call at 888-825-5225. And for all of you on the Ramsey Network app, just wanted to say hello. Glad you're here.

Glad you're here. And all of you listening on radio, we are back. And again, we're here to talk about your life and your money, your career, relationships. So give us a call. All right. Up first, kicking us off this hour is what a great name, Rachel from Denver, Colorado. Hey, Rachel, welcome to the show. Hi, thank you so much for having me. Absolutely. How can we help? So my question is, how should my husband and I handle finances? We've been married for about two years now, and we just opened up a joint account last year. Oh, great.

So that has caused some kind of like issues as far as who gets a say on how the money is spent or saved. Okay. So you're not deciding together? Exactly. as far as who gets a say on how the money is spent or saved. Okay. So you're not deciding together? Exactly. What's causing you guys not to sit down and do a budget or to look at the month ahead of time and just say, okay, here's how much we need for food and stuff for the, if you have kids or the electric bill,

what causes you guys not to plan ahead together? I kind of feel like my husband just has that main control over the budget and doesn't really want to, like, he doesn't care if I have a say about it. Are you both working? Yes, we're both working, and he does bring in most of the income. Who cares? I just think he has more of a say than I do. Yes, we're both working and he does bring in most of the income. Who cares? He has more of a say than I do. Yeah, that'll cause issues.

And so when you bring that up to him and you say, hey, I view us as equal in this. I think that this is something we should both be contributing to. But I feel like you don't care about my input. What's his reaction to that um or have you not said it i have i guess talked to him about it before he just doesn't really know how to get on the same page because he's so like firm and what he thinks that he's not sure how we can both i guess so give me an example is it is it something like if you say, hey, well, first off, tell me your income, and then we can talk through this in real examples.

Okay, so combined we make close to $100,000 a year. Okay. And so if you say to him, hey, the grocery budget is $800,000, and I need for it to be $900, 900. Is that the type of thing we're talking about? Like line item type stuff? Is it the idea of, hey, I think we should be paying off debt? And he's like, no, we're going to be saving. Tell me how this plays out. So I guess it's more like he wants to save and I want to be able to do both. I'm not against saving money, but I feel like he doesn't leave any room

to actually spend too. So I guess that was my next question is, can there be like a healthy balance between both? Because I feel like he just wants to save everything. I think there can be a healthy balance. And only you're going to be able to tell us this because you're the one that's in the relationship. But the truth is, it's almost never are two married people the exact same personality with money. You know, there is usually somebody who's more of a saver, somebody who's more of a spender, someone who's more nerdy versus someone who's more free spirited.

And so parts of this sounds like that kind of classic opposites attract thing. But there is part of it that when people use the word controlling, I hate when people, you know, my husband is controlling or my wife is controlling because for me that points to okay this is beyond money this could be beyond this could be more of a relational issue um and not just playing out in the money and i kind of hear that yeah but i don't want to well force that in here what it's sounding, Rachel, is that he just doesn't respect your voice in life and in marriage and that your opinion doesn't hold the same weight

as his opinion. And that's a problem because like Jade said, that's not a money issue. That filters into every part of your marriage. When one spouse is superior to the other or they feel like they are, that's a really, you know. strong that's a that's a dangerous place because that the patterns that come out of that end up not being good for you rachel not good for him but especially not for you and so that's

what i that's what i worry about because i mean it would be one thing if you were saying and maybe you are and you can correct me that oh my gosh i just like want to go and shop all day and go on all these vacations and go deeply into credit card debt and live this extravagant lifestyle. But what I hear you saying is, I just want to have a little bit of fun with money, and he's not even allowing me to have access or the ability to do that because he's telling me what I can and cannot do. And Rachel, that's a red flag. Yeah, that's not that's not OK. Right. And I'm not trying to spend like extravagantly. It's just I think that we can get like a few things a month and we might not have like the most money left over after bills. But I think we can get like a T-shirt here and there and just like little things and it should be OK.

Like, I don't think anybody should feel like guilt over it. Right, exactly. Now, are you guys, does he have a goal for the savings? Is it that we're trying to get an emergency fund in place or what is he saving for when he says, I just want to save? Yeah, I guess kind of like an emergency fund or... Kind of like, or no, we're shooting for a three month, like, is there a specific goal there's not a specific goal i just so then that's it yeah so to me that's an issue rachel that's

that's a that is a um uh a demeaning idea because there's not a there's not even a reason behind that's right that's right it's just what he feels that he wants. And again, saving is smart, people. So don't say not sure. But the way all of this is unfolding two years into marriage. I mean, that's a it's a it's a problem. And I think this happens. You know, you're feeling and what you desire and what you want it's not going to be what you're telling me I can't spend don't point it at him this is this is Rachel this is you so here's what I'm feeling and here's what I and here's what I need I need to know that I have the same that my voice holds the same level of credit as yours does. And here's what I'm seeing with the numbers. I'm seeing that we can spend an extra $50 a month and it's not gonna break us.

And this is what I wanna do. And if he has issues with that, Rachel, at that point, I would bring in a third party. I mean, at that point, there needs to be a you know, a counselor involved or a therapist or something. Because again, now it's not about the money. It is about his control and what he wants. And that's stemming from a whole other place that he needs to work on himself.

You can't make him do that. But there's a lot here. And what I caution you with is, if you don't hit this head on, Rachel, from a marriage perspective, and again, we're forgetting about the budget, from a marriage relational perspective, your marriage, it's going to struggle. And I'm scared for you that you lose your voice over the years to come. Two years in, you're very early in the whole marriage. And I mean, my mom used to say,

she was like, you set the tone. And all of these things that when you're newly married, these things pop up for the first time. And it's an opportunity for you to say, OK, here's the tone I want to set. Here's the boundary I want to create. And this is that opportunity for you to teach him how to treat you. That's right. Truly is what's happening here. So I agree with everything Rachel said. Does that help, Rachel? That probably gives you probably more weight and heaviness after after calling us but I I hope as just a third party with Jade and I not knowing you at all that there um that we'd be able to to at least maybe shed some light on things or affirm you and what you're feeling because um I think it feels weird because it's weird so I would I would

hit it straight on and and bring in a third party because it's one of the best things you can do for your marriage long term. Thanks for the call, Rachel. This is The Ramsey Show. When it comes to the holiday season, when it comes to your money in general, being in control of your money is so, so key. And there is a great app, if you've not checked it out, EveryDollar, which will help you budget and actually be intentional with your money. And we are actually doing a live training, a free training with our EveryDollar team on October 24th at 1 p.m. Eastern Time, 12 Central Time. And this will help you really get clarity on how to budget what does it look like to budget what does it look like to live on a budget i mean we get through really the nitty-gritties of that so you can register for free at ramsey solutions.com webinar or click

the link in the description we will have it there for you over a hundred thousand people have already registered for this free live training. I know. And I'm doing some of these, Jade. And I was looking. I don't think this one's mine. Yeah, I looked. It's not mine either. So it's either going to be George, Ken, or yeah, one of them will be.

Or Deloney maybe is doing them too. I'm not sure. But there should be a Ramsey personality. If not, it's just the EveryDollar team. But it is a great webinar to check out. So again, to sign up for that and to join a hundred thousand other people for this free training you can go to ramsey solutions.com slash webinar all right up next we have scott in washington dc hey scott welcome to the show hey thanks for having me absolutely how can we help so my question for you guys today is it revolves around what I should do with the money I'm

making from my company as far as paying rent for a shop and getting ready to move out and buy my own piece of property. All right. Good for you. Okay. Give us some numbers. What's going on? So I just recently graduated from high school this year, 18 years old, and I'm running my

own landscaping company and I'm paying roughly $1,800 a month to store all my equipment and having like a heated and cooled space to work on all of it as well. Okay. How much are you bringing in income wise? So that's kind of a hard part. It's been pretty consistent between $8,000 to $11,000 per month. That's great. Yeah, I try to keep it consistent, but with mowing coming to an end soon,

that's a big part of my income, and just landscaping in general slows down around this time of year. So I've been stockpiling cash and just looking into how much I'm going to spend and rent over these next couple months. And I'd rather put my money towards a piece of property than continuing to rent something. Is this your first year doing this? Or how long has this been your business?

So I started this back a couple years ago my sophomore year and it's just been growing since then okay so you've got i don't know you tell me eight good months where you're making eight to eleven thousand and then i'm guessing winter comes in dc and you don't have many clients is that what's happening yeah right it'll slow down almost almost 80 i know last year i had to take a loan from my parents just to keep my head above water. I got that paid back putting aside, knowing that you're going to come up on four months where you're not going to do much business. That's what would be typical. So with,

with what I've been making, all of that is just gross numbers at the end of the month, after I paid my employees, my rent and everything. Ah, okay. Yeah. Sorry.

Those are my, those are my, so what do you pay yourself? What do you pay yourself and take home in your personal pocket every month? So that's where the issue lies. I haven't been paying myself this season. I've had a real, I couldn't get around to it and take the time to set up the payroll. So I haven't been paying myself this season.

I kind of just live at home and fill my truck up. So does that mean that you have a bunch of money just sitting in savings waiting for you to have a payroll? Or no? I mean, your expenses aren't eating into everything you make, though, right? Scott, you do have margin. After everyone's paid, there is an amount of money that you've made profit right yeah yes yes how much is that so over the past couple months it's been in that three to five thousand dollar range that fits in the account and then uh as of right now i have

just over 12 000 sitting in the account okay perfect my question for you scott is what are you um you graduated what are you going to be doing in the next year, two years, three years? Are you going to college? Are you going to be doing this full time? I plan on continuing this full time. I was getting ready to line up some design, like landscape design courses, online college, stuff like that, focusing just to become better in this line of work. That's great. Yeah. Yeah. Going back to your first question about the storage, I think that if this is your business

and you're interested in growing it to the level that you would seek out more education for it, then I would say, yeah, the storage is just part of the operating cost of your business. And if you're still netting $5,000 a month, I think that's pretty great for where you're at and period. The idea of buying a house, I think that's something that you can still do while you run this business over time. Keep playing out this business. Keep making sure you're able to grow it and grow it. Start paying yourself a wage. And then once you start paying yourself a wage, you can start to say, okay, how can I afford to live? I'll rent somewhere for a while. And so at that point, this business is just your bread and butter and it's the way you work and live. And then you create your lifestyle based on what you earn, just like anybody else would. Yeah. Are you looking to buy storage for

this, for your equipment instead of renting? yeah i was i was looking to buy a piece of property so i could put it put a you know building on it so i could get out of what i'm renting and i see keep all my equipment have you have you looked at prices for all of that how much it would cost to do that build out and to buy the land so i'm just outside of dc and even just all this property is so expensive. You're looking at roughly, you know, $70,000 to $100,000 an acre, and that's if it's available. Yeah. And so...

Yeah, I think when you... Go ahead. Sorry. Go ahead. I was going to say... When I kind of priced it out, it would be no less than $300,000 to get a decent-sized building with a somewhat sizable piece of property. Yeah. So at this point in the business, Scott, I would not make that kind of investment.

I would keep renting. And even though it feels like you're throwing money away, you're not. I think you're being wise. I think you're being wise. I think you're buying time. And as this grows and as you're able to cash flow and actually, you know, look at other options and move at the speed of cash, I think that's going to be where you're going to succeed long term. I think if you jump into something now, especially something like a $300,000 property, I don't think that's wise.

I don't think it's wise for the stage of the business, the stage of your life and all of it. So I would, I would keep renting and I would keep growing your business where that rent, you know, starts becoming a smaller and smaller percentage of your world. And, and I think it can be,

I mean, I think, I think you, you're killing it already at 18. I mean, it's amazing. And I would be watching very carefully, you know, all your expenses,

payroll and all of it. And then when you start when you move out, and you actually have to start paying yourself making sure that you're doing that. And that you're living on just what you need to continue to reinvest back into the business. But I think you have a pretty good cycle. But yeah, if you're calling to ask about buying a property for the storage, I would not if I were you. Okay, okay. And I guess a couple, just one more quick question. How would I gauge what to pay myself? I mean, it's up to you.

You know, at your stage, if I were you, I'd like to have, I'd like to build it up to where I've got at least kind of like on the personal side, six months of retained earnings, whatever it costs to operate your business. I'd love to save that up. And whatever you're able, like after you've done that, after you've paid your employees, if you're able to say, okay, everything's taken care of, what can I, and I've decided I'm investing, I don't know, 50% back in the business, whatever you decide, it's really up to you what you need in order to make your life run. And I probably in the beginning, in the beginning, I take a small payroll as I can so I can keep reinvesting back in. And then once you see things are starting to do even better, then you can say, okay, I've earned my I've earned a raise and you can raise yourself a little bit more. And, and it's just very gradual. But the key is you don't want to eat up all of your income early on and pay yourself, right? Because you want to be able to reinvest. So start with as little as possible and then build it up as the business grows. Yeah. And hold on the line, Scott, and Christian will pick up and we'll give you Entree Leadership.

This is our book on how to guide small businesses when it comes to some questions that you're asking here. And hopefully that will help as well. Thanks for the call. Welcome back to The Ramsey Show. We're going to the phones and we have Jake in Houston calling next. Hey, Jake, welcome to the show. Hi, how are you guys doing today? We're doing great. How can we help? So I have a chronic condition and I'm currently on baby step six, but I do not have any life insurance for my wife and family and I'm having trouble getting life insurance. And so I'm wondering if I should be putting money aside since I don't have a life insurance

option. Yeah, what's the condition, can I ask? I'd really rather not say that. The doctor said I have about 10 more years of working time before I'd be really in a critical position.

I'm so, so sorry. That's all right. Either healed in this life or the next. That's right. Well, you've put yourself in a really good position with your family. So kudos to you there. And I know they're going to be very grateful. The fact that you're in baby step six is amazing.

So that tells me that you don't have debt. You guys have got a significant level of savings, which is nice. And I'm guessing you've been investing all this time. Can I ask, like, do you have a nest egg? We do. We have a $1.4 million nest egg. Okay. Wow. We make about $180,000 base pay and then about $150,000 in bonus. Wow. So great income, but all of our money is in retirement accounts. And how old are you and your wife? I'm 39 and my wife is 42. Okay.

Do you guys have kids? I have one child, yes. Okay. What is, is she working or is she staying home? She stays at home. Okay. How much do you guys have left on the house to pay off? $340,000.

$340,000, okay. And what's your timeline on paying off the house? When you've talked with your wife, when do you think it'll be done? About three years if we put all of our excess income towards the house. Okay. That leaves about seven years where I've got to be totally ready for medical and retirement. You said you've got seven years until you feel like you need to be totally ready. Is that what you said?

Ten years total. If it takes me three years to pay off the house now, then seven years after that to save for everything else. Okay. Will you be able to bring in, I know you said, well, you'll have to stop work in probably two years. Does that mean physically going to a location or will you still be bringing in and come at that point or probably not? Stopping working 10 years.

I'm sorry. Oh, 10 years. Oh, I thought you said two. 10. So 10 years. Oh, okay. That's way. I'm happy to hear that. Okay. Um, so the good news is, you know, you, the first problem was, Hey, I don't have life insurance, but the good news is you're going to be self-insurable. You, you've set you and your, your wife have set your family up in a really, really great way. Because the thought

here is in that I'm not even running any numbers. I just know that a lump sum is going to double every seven years. And the point that you already have 1.4 million, and then there's this 10 year horizon. And you know, you're making over $300,000 a year. And the house is going to pay off, you're not going to have a payment in the world. And so I think that your wife is going to be okay. What I would do is I'd probably sit down with a smart vester pro because I want to make sure to your point that she's able to access the money she needs, even if it's before her being 59 and a half. Right. Yeah. Cause I'm thinking if, you know, 10 years from now she will be, yeah, 52. So there'll be about that seven-year gap.

But I do wonder, Jake, because you guys are making such great money, do you foresee yourself making around that $300,000, $330,000 a year for the next 10 years, if not going up, or do you see it going down at all because of health issues? It'll continue to go up so luckily i am an engineer so i can work remotely or i have options so i mean yeah so if you think about jake if you guys pay off this home in three years which is what i would do you'd have seven years left of working of making that amount of money you guys could stash away so much just in a high yield savings account you know that she could um that you guys can live off of after you stop working for that time that seven

ish years um between retirement age and then once you guys hit that age you'll be able to access yeah i mean like you said it's gonna be over three four it'll be four million dollars by that point yeah oh yeah and a smart investor pro is going to help you figure out like that best bridge is it a high yield savings is it a brokerage account is it another vehicle that you're able to get to that money but it can also still have some some gain on it um a decent amount of gain uh yeah hey i hate that this situation is what it is but you're a great dad and a great husband for setting this up with your family thank you truly yeah wow jake thank you for calling if you stay on the line christian is going to pick up and maybe we can um hook you up yeah with a smart vestor pro

um and we'll help you show you like exactly where to look get a couple of names so you can call them and kind of just see who you're comfortable with um but i'm with jade i'm praying nothing i pray for healing on this side of heaven for you and your family and um i'm so sorry and you know it's one of those things that when life well there are things we just we can't control you know health is for sure one of those and on this show we get we get that call a lot of just um you know things happen sure one of those. And on this show, we get that call a lot of just, you know, things happen. And one of the best ways, it doesn't make it better, but it does bring a level of peace in an area of life is when you have your money under control. And so that's... And when you've set your family up, that worst case scenario, I know everything's covered. And

I mean, these are the reasons that we teach. You need a will. You need life insurance. You gotta, you gotta pay off your debt. You've got, because no one predicts these things. That's right. That's right. Nope. You know, no one predicts it. Yeah.

Oh, Jake, we're praying for you and your family. Thanks. I'm so glad you called. I hope that helped. Up next, we have Ken in Wichita. Hey, Ken, welcome to the show. Hey, Rachel. Appreciate all that you, your dad, and the Ramsey personalities do.

You guys are a true blessing. Thank you. Got a question today, hoping you could pressure test something regarding my pension. So my wife and I are FPU grads, debt-free, including the house. I was laid off about three weeks ago. I'm 55. And since I'll be separating from the company, I can start taking a pension now. And if I do that and I plug those numbers into Excel,

it seems to me like I'd be crazy to not start taking it at 55 versus waiting until 62, even though the numbers are higher because my calculations show it'd be 19 years for it to catch up if I wait until 62 versus taking it now and investing it at 8%, like I would assume Dave would say, it never catches up. So am I crazy To start taking it at 55 versus Waiting until 62 No I don't think you're I don't think you're crazy And especially if you do something With that money that helps

But you know what I mean to Grow it right so even if you put it somewhere That you're going to be making more than if It sits in that pension I think that's ideal So how are you Do you guys need it to live off of, or you're just thinking because of the math, might as well take it now because we'll be able to get more out of it?

Yeah, totally a math situation. Obviously, I've got to go find another job, but we're in good shape on that. I'm employable and we'll do that. But just talking to some peers that are in the same situation from this layoff, they were like, hey, why would you take it now? But I'm just, I'm an Excel guy. So I don't want to get in there

and then use the investment calculator at 8%. And I'm just like, man, not taking it. Because you're thinking you're going to turn around and reinvest that money. Is that what you're thinking? True, true. That's the plan. But even if you don't, um, just the raw numbers, the seven years, uh, in order to make up that seven years

of withdrawals, it would take 19 years and put me at like 81 before, uh, it would catch up if I started taking it at 62. So I just want to make sure I wasn't missing something. I know the taxes might be a little bit different when I'm retired, that type of thing. But it just seems like take it now is mathematically the way to go. And I've always heard Dave say, you know, the pension, you know, it's not yours until it's yours. That's right. Yeah. That's the thing. In the hopper type thing.

That's right. Yeah. The good thing about it is it puts you back in control of what you do with it, even if you're going to go back and reinvest it. And the truth is too, Ken, you've done such a great job that, I mean, you guys are completely debt free. Like if you take it now or you take it six years, you're going to be okay. You know what I mean?

Like I don't think you're going to make this dire mistake, but anytime you can get money, even in a lump sum in some situations, putting it back in your control, you're usually better off than leaving it somewhere else. So I hope that helps. Thanks, Ken, for the call. Our scripture today comes from 1 Timothy 6, 18. Command them to do good, to be rich in good deeds And to be generous and willing to share Shonda Rhimes says Be a doer, not a dreamer Good deal I appreciate that

Put some stuff into action, people Put some stuff into action I know, that's right All right, going to the phones We have Sarah in Fort Myers Hey, Sarah, welcome to the show Hi, ladies Thanks so much for taking my call Absolutely How can we help? we have Sarah in Fort Myers. Hey, Sarah, welcome to the show. Hi, ladies. Thanks so much for taking my call. Absolutely. How can we help?

So I'm looking for a bit of direction. The long story short is I just found the Ramsey show, the podcast a couple months ago when I was pregnant with my first child. Yay. Yeah, congratulations. Yeah, thank you. He's two months old now and he's absolutely beautiful. My question is, when I was six months pregnant, my husband was laid off from his job, which was extremely stressful. We had a lot of medical complications with my pregnancy and then with the delivery as well. And when he was laid off, we ended up having to pay an arm and a leg to extend our insurance policy through the former employer. So we unfortunately had to burn through what little savings we had to afford that. And now we're pretty much starting from scratch with a newborn. And my husband is

really wanting to try to pay off our credit cards and get our debt down. And I'm trying to decide if we should try to put more money towards our emergency fund, which we don't have now. I'm going back to work kind of part time. So I'm trying to decide if I need to go back full-time, should we sell one of our cars? I don't know. You've got a lot on your mind. You've got a lot on your mind. I mean, the good news is you did what we tell people to do.

When you were pregnant, you stacked up because you don't know what's going to happen. And so you went into stork mode and you needed what you saved up. And so no guilt on that. You don't need to be feeling bad. Sometimes people go through their emergency fund and they feel guilty that they used it. And I'm like, no, that's what it was there for. And so you did right.

But now that the storm is over and the baby is here, now you can get back onto the baby steps. And yeah, it's getting that thousand dollars back saved again. And you know, to your husband's point, whatever the smallest debt is, if it's the credit cards, how much debt do you guys have? Well, we have two car loans. Altogether our debt is probably between 35 and 40 between the two cars and then some credit card. And then of course the medical. So.

Tell me the real numbers so we can really see yeah so on his car uh we owe about uh 14 000 my car we owe about 21 i believe 21 his car just yeah 21 000 um we just started having some mechanical issues with his car so we were considering selling that because it is worth right about what we owe on it so we thought about going down to one car yeah um which we could do it would be a challenge but we could do it i love that with the baby it's a little tricky but um we could try to find a way the hard part is my husband's job he's he's really not loving it he's exhausted emotionally from the pregnancy and all the medical stuff that I went through.

He was really scared. It was a lot to handle. And now he's considering changing careers because he absolutely hates the field that he's in. So we're on this little bit instability storm right now. I would press pause. Cash is really hard. I would press pause for a second. Cause you guys have just come through a unknown difficult season,

right? It was the layoff. Then the baby came, then there was no insurance. So there's part of this where I would love to create just a quick sense of like, we're getting our bearings. We've got our bearings before we add another big change into the mix.

Because that would have mean he just got this new job, right? Yeah. We've only just been on the insurance this month for the new place. Yeah. He had to wait like 90 days or something. And don't get me wrong. I'm all for people being happy in their work. But we need to just like 90 days or something. And don't get me wrong. Like I'm all for happy. I'm all for people being happy in their work. But we need to just cool out for a second.

Like let's get this baby home. Let's get our heads around what the financial picture is. And then that can decide what we need to do going forward. Because and I mean, I get it. Everybody wants to be happy at work. But there could be a period of time where he's like, I'm doing this because I need to do this to get the family on good footing. And then I'll be able to go and pursue more of what I want to do. So the 14,000 car, 21,000 car.

Well, I was going to just add to that, Sarah, that usually when there's some level of like a traumatic experience, which it kind of sounds like y'all walk through, don't make knee-jerk reactions. And we say this if someone's had a death close to them or if something big happens in life that really kind of takes you out emotionally, making big moves in life is not smart. So waiting before he quits and all of this,

so I echo Jade for sure. And for you guys, yeah, cause how much is he making now? Uh, he makes about 85, but he's, I'm not so much concerned about him quitting. He's, he's totally in the mindset of, I need to provide for my family. I'll do what I have to do. Yeah. Plus he wouldn't quit until he had something else lined up. Right. Exactly. Okay. He's afraid that they're going to let him go again. I think he's got a little bit of PTSD from being laid off previously, which wasn't any fault of his, but the company that he's at now, the new job that was supposed to stabilize it, it's not really a good fit. What type of work is it?

The way the business is set up. I'm sorry. What type of work does he do? He works in accounting and financial analyst positions mostly for home builders and construction firms and that's being the numbers guy he's tracking all the mistakes he finds a lot of things that are wrong and everybody thinks he's the bad guy and it's just it's just kind of the way that the industry goes i think okay well even more reason then for you guys to really get laser focused on this debt, because that's what's creating instability and a lot of risk in your life. So aside from the cars, which I love the idea, if you can break even on one of these, even if you go and you buy something a lot cheaper in cash, I like that idea if having a one car family doesn't work. But back to your initial question. Yeah. Up until something does happen right now, I think we're operating on a lot of fear and what if. But the truth is you're home, the baby's healthy, he's got a job. And right now nothing's happening. So I would say, OK,

let's push pause on the baby steps, get that thousand there. Do you have any more money left in savings above a thousand uh not really okay that's fine i think he has yeah he has a roth i think he set up a few years ago that's got a little bit in it no don't touch that i meant liquid savings okay no so yeah you're listing them smallest to largest and you guys are getting on the same page you're sitting down tonight and going, okay, we've been through a lot. It's time for us to make this right. We've got a family now. Let's clean up our mess and let's decide that moving forward, we're going to move methodically. We're going to make decisions together.

We're going to get out of debt. And I mean, kudos to you. Cheers on a brand new life. Yeah, that's right. Yeah, it's a mixture. We're absolutely in love with our baby boy. He's healthy. Praise God. It was a really stressful time getting through all those issues. So we're thankful. But we're also trying to find a way to start looking up, you know, it just seems

like one thing after another. And then the car breaks, you know, and then the, you know, the boss doesn't like him or, you know, whatever. It just seems one thing after another. So I'm just kind of looking for some peace of mind for a few weeks at least. For sure. Yeah. And you'll find too, Sarah, you know, life in general, and then you throw kids in the mix and this is, it magnifies this too, but it, it's, it does, it can feel like seasons of life. It's like two steps forward, three steps back, one step forward, two steps back. Oh my gosh then I and then a rhythm another season hits and it's like wow this is a peaceful season we're thankful for this and then something else happens right but it's just it is the rhythm of life and you guys are experiencing that uh but in big ways I mean

kids job I mean these are big adult things right that you know you feel. So I think getting some control around the money I think is going to give you a level of peace. Even if the debt is still there, just being on the same page with your husband, knowing here's how much we're spending on groceries. Here's what, like, there's just a plan in place. And it allows you to pour that energy into

something. Yes, that's right. Into something else. Yep, for sure. And I do, and we hear you loud and clear, and I think a goal would eventually be for him to be in a great environment working. Yeah. You don't want to work for a jerk, you know, for so long. So we're all about that, too. So great. Well, thanks for the call, Sarah. We really appreciate it. Thanks to all the gentlemen in the booth. Thank you, Jade, to being a great co-host. And thank you, America, for listening. Remember to take control of your money and create a life you love. I'll see you next time.