The Ramsey Show - App - You Choose: $1200 Car Payment OR 3 Million Dollars? (Hour 2)

Episode Date: March 10, 2023

George Kamel & Rachel Cruze answer your questions and discuss: "How can I possibly afford a house?" Short-term vs. long-term mindsets with money, Accessing retirement without tax penalties? "Collectors won't negotiate with me" from the blog: How to Pay Off Collections, Buying a car in Baby Step 2. Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Want a plan for your money? Take our FREE 3 minute assessment: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

Девочка-пай Live from the headquarters of Ramsey Solutions, broadcasting from the Pods Moving and Storage Studio, it's The Ramsey Show, where we help people build wealth, do work they love, and create amazing relationships. I'm George Camel, Ramsey Personality, joined this hour by Rachel Cruz. And we are taking your calls at 888-825-5225. That's 888-825-5225. Josh joins us up next in Johnson City, Tennessee. Josh, welcome to The Ramsey Show.

How are you doing? Doing good. Hey, thanks, you guys, for helping everybody out today. I appreciate it. Absolutely. What's going on with you? So I'll try to keep it brief. I feel like you guys have probably answered this close to 100 times in the past couple months. My wife and I are first-time homebuyers. We're not quite in the market yet. With our income and our situation, you know, we've done the baby steps. We're 2, 3B. We're saving money every month and putting them into actually some mutual funds to try and

get some interest on that stuff. But in this market, it just, it feels almost impossible. I mean, there's houses in my area for, you know, three bedroom, two bathroom, 1,700 square feet for $325,000. And, you know, as a family of four with two jobs in a business, uh, it's, um, it's just not, it's not feasible. So like, what kind of advice do you have for individuals and couples and families in these kinds of situations? So how much money do you have saved? So we've got, you know, towards the house right now, we only have three, but we're putting $500 a month in some mutual funds.

Okay, Josh, I hesitate where you're putting your money. I understand you want it to grow, but it's so volatile. And last year, I mean, it's doing better now, the market, but I mean, if you had that money in it last year, you would have lost a lot of that. And so we usually say with investing, it takes about five years kind of for the ride, the up and down to actually see some level of growth where it feels like steady and consistent. And right now, money markets and high yield savings accounts, I mean, the percentages... You can get 4% on these high yield savings right now, money markets and high-yield savings accounts, I mean, the percentages... You can get 4% on these high-yield savings right now. Yeah. That's guaranteed versus the market.

Yeah. So again, if you guys are going to be buying a home in the next two, three, four years, I honestly would hesitate putting them in mutual funds. I understand what you're saying to get some kind of growth, but it's still a little too volatile and too short of a timeline to do that. Even if it was in one of those high-yield savings, you know, within five years, that's, you know, we'll be talking $35,000, $40,000, and that's 10% on

something, I'd still be house broke, you know? Well, the interest is not going to be the winning factor here. It's your savings rate. And so the real question is, why can't we save more than $500 towards the down payment every month if we have no payments in the world? Yeah. So that's what I would focus on.

How much are you guys bringing home a month? Bringing home? Typically about $5,000, close to, maybe a little under. And you said that's between two jobs and a business? Yeah. Yeah. My business just started kicking off last year. I'm hoping to gain some this year, but it's not looking like that as of right now. Okay. And are you doing the two jobs or is your wife working outside the home i'm doing my wife and i both have full-time jobs and i have a side business right now okay so the other part of this equation is can we get one of those incomes up or both incomes up by switching jobs

gotcha okay yeah and i hear you josh i know i know it's defeating and you know where we see the numbers we're We're in Nashville. So we know. But here's what's so hard. And I feel like we have this conversation a lot with people in California because everyone's like, I'm in California. And so what do I do? But math is math. And that's what's difficult when we sit in our seats, that we know that there's a person on the other side, right, Josh, like you and your family. And it's like, yeah, you guys want to be homeowners, you want to be able to go and own a home, which we want you to do that too. I think homeownership is a really important part of your entire financial plan. But we don't want it to wreck you. And so what sucks right now is that, yeah, what you could have done four years ago with buying a house, it looks different today, but the math doesn't change. And so we don't adjust our formula and the way we go about buying, the wise way of buying a home. That really doesn't shift depending on how the market is doing. It's there and consistent regardless because, again, we go back to that math. We don't want you to put nothing down, get a terrible mortgage, and it being half of your income. All of that

would create more stress. That dream of owning a home ends up becoming a burden. And so, again, I know it's frustrating and it's going to take time. And you guys, again, whether it's your incomes go up or your business takes off, or even the market adjusts a little bit. All of this can be part of the equation, but you do want to stay on that path of looking to save up. Again, we always say 10% at the minimum for a down payment to be there. And you may not get as much house as you would have years ago. And again, that's so frustrating. I know it's so frustrating. But that's where we are right now. But we just don't want all the listeners, including you, Josh, to go and do something

to wreck your financial situation just to have a house, if that makes sense. Yeah, no, totally. I definitely agree with that. I mean, that's why I was just reaching out to those who might know a little bit more than me. Yeah, and so what you were saying, so give us some of the things

that you guys are finding. When you look at, if you're looking up on Zillow or whatever, maybe what are the houses going for, did you say, around your area? Something that would feasibly accommodate what we need and what we, not even what we want,

really what we need is 320 to 370,000. Okay, yep. Yeah, and we just did an article about the housing market. I think the median house price was 366. So that in America today. Yeah. So what this means is it's more patients and more income because we can't control the market. So if I'm in your shoes, I'm taking the money out of those mutual funds.

I'm going to put them into a high yield savings account. Be aware of the tax implications based on the gains as you do that. But that's going to give you a more guaranteed return versus what if the market goes down 20% and now you're extra defeated because you're pouring money into this thing and the balance is lower than when you started. So that's my big fear on that side. On the other side, the question remains, what is in your control is making more money. How do we turn that 500 bucks into a thousand bucks into 2000 bucks? Think about how that changes the numbers. $2,000 over the course of a year, that's 25 grand

a year. Three years from now, that's 75 grand we have for a down payment. Yeah, because being able to do that, if you're $1,000 a month saving towards a house payment i mean within two two and a half years you guys would have a down payment to be able to go forward with buying a house so again it's it's the patience part as well so it's it's finding that extra income where you can um and again making it an aggressive goal so even lifestyle wise saying okay you know are there are there things we can cut here or there? I mean, even 50, 100 bucks per month, you know, helps that timeline decrease if that's really a goal you guys want to do here in the next three years.

So it is possible, but it's, I mean, it's patience. But let me say this, Josh, time does fly. Let me say that. I know three years is like, that sounds so exhausting. But three years ago, it was 2020. It was, you know, March of 2020 was three years is like, that sounds so exhausting. But three years ago, it was 2020. It was March of 2020 was three years ago. And granted, that was the weirdest three years of any of our lives. But that's what I'm saying. Time goes quickly. So even though it seems long and daunting, stick with it and you're going to be so glad that you did.

Absolutely. Thanks for the call, man. 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 anything approved through the bureaucracy. So if you feel like the system is working against you, try a biblically-based alternative to health insurance, Christian Healthcare Ministries. CHM is a health cost-sharing ministry that's helped hundreds of thousands of families like yours take care of over $11 billion in medical bills since 1981. And CHM has also helped them stay true to their values and avoid miles of red tape. And CHM support goes far beyond meeting financial needs. They'll also help meet spiritual needs. Members become part of a family who will pray with them and for them when they experience a

medical event. 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. That's chministries.org slash budget. I'm George Campbell, joined by Rachel Cruz this hour. This is The Ramsey Show. You can give us a call at 888-825-5225. You jump in, we'll talk about your life and your money. Well, Rachel, I like to get riled up by videos on social media. And one, I stumbled upon one that really got my blood boiling and I wanted to get your take on it. You have not seen this. I feel like a magician being like, you have never seen this. I love the live reactions. And so I want to play it and spark a little conversation about it. So

let's roll that beautiful bean footage. Why is your car payment $1,300? Because first of all, this vehicle was $62,000. I did it for 60 months instead of 72 and I went zero down. I just didn't want to put any money down because it's just, it doesn't make any sense to me. You put, how much money do you save if you put more money down? So basically every thousand dollars that you put down is about $20. So it would take five grand for me to lower my monthly payment by a hundred dollars. So in 1300 versus 1200, the same thing. Yeah.

It would take you, what is that? 60 months to get your money back or 50 months? Oh, yeah. To get five grand back? It'd take way too long. Wow. Rachel, some people's cornbread just ain't down in the middle.

You know? They just didn't fully bake in the oven. So this is, let me recap what this guy just said. He bought a vehicle that was $62,000 MSRP with zero down, 1300 bucks a month for 60 months, which if you're doing the math at home is $78,000 for a vehicle that was worth $62,000. Before he drove it off the lot and that it's, yeah, depreciated already. And so his

logic though has nothing to do with the interest paid. He's going, why would I put more down? It's only going to lower the payment by a hundred bucks. What's the difference between $1,200 and $1,300? And this is why we're broke. It's not, we can't keep blaming inflation and eggs. At some point, we have to look in the mirror and go stop being an idiot stop buying $62,000 cars and paying $78,000 for them while making $50,000 and then going oh I wish Biden would really fix it and the taxes and the egg prices are out of control Rachel I'm going full king of the hill at this point oh I love it George well for me car payment car loans car payments it's like it's it's the it's my worst type of debt.

If we had to rate debt, for me, it's the most annoying. You know, student loans, you get a degree, it's stupid. That's probably second. I mean, like credit cards, people are like, we'll pay it off, whatever. So if we rate the debt, car loans for me, it's the dumbest debt that you can be in. It's the one we justify the most. But mathematically speaking, when you just look at your finances, it's the dumbest thing the most it's the but but mathematically speaking when you just look at your finances it is it's the it's the dumbest thing that you can do with your money it really

is because you're borrowing money paying interest on something that's going down in value it's not an asset and it's for what to look to say that i mean i'm being serious like i'm like this is unbelievable like it's it's one thing when we talk to people and they're in credit card debt because they're behind on their bills and they're trying to let you know what i mean like and you're and you're kind of talking through this needs versus wants and uh you know we get those calls you know all the time but i'm like but a car payment it's it's literally two for sixty two thousand dollars to look a certain way and feel a certain way it's an ego thing the book the psychology of money have you read it oh no Delaney told me to read it so good I've heard great things but I love what he said in there he said

really the reason the reason people don't save like it's it's your ego and so if this guy's ego was out of the way and drove a great Honda Civic and didn't have that car payment, he would be able to save that, what, $1,300 a month and invest it, but it's going into a, not an asset. It's again, because it goes down in value. It's not even like a house. That $62,000 car is now worth 50 and then 40 next year. Yeah. I mean, it's just, and again, it's for a car to get to point A to point B. And I'm not mad at cars. We like cars. So it's not that, but it's the way our mindsets around it and financially how it plays out. It just becomes such a huge burden on families. And it's not wise.

What's shocking to me. So that poor guy. Come on, dude. Like we have such a culture of debt that we're so obsessed with debt that the logic doesn't go to, hey, how much am I paying in interest? Instead it goes, well, my payments actually, you know, it's a hundred bucks more, but what's the point of putting more money down? Just save a hundred bucks on my payment. We're still thinking in such a stupid lens of what's the payment. Can I afford the payment? They're not even looking at the entire mathematical equation.

Forgetting interest and all of it. Well, here's where that short-term thinking leads us, Rachel. Okay. Tell me. CBS News article, millions of Americans nearing retirement age with no savings. So here's a real sad story of a woman who's juggling two jobs. She's 66 years old, sometimes working up to 11 hours a day, hoping, wishing to be retired, playing piano, enjoying her life, but she has no savings or 401k, not even enough to cover an emergency. She sold her home and bought a smaller one with two other women at 66. Yeah, yeah. This

is really sad. And here's the stats. The U.S. Census Bureau data shows that 50% of women and 47% of men between 55 and 66 years old have no retirement savings. Half. Zilch. That's pretty wild. If you were to quiz me if we did a pop quiz i wouldn't think it was that high i didn't think it was that high oh man and she said i have a live for now philosophy i guess you think i mean it's shocking to me that people wake up at 66 and go i should probably do something about that retirement thing huh instead of using time while we have it on this, our precious time on earth to retire with dignity and have a great life. And so this is really,

really sad. According to AARP, you know, experts say it's not too late to make a plan, which means we're continuing to work. We're lowering cost of living, saving when you can, delaying social security benefits until 70 to get the largest check possible the problem is people can't delay those social security checks because they need them now yeah they have because they're so broke and so this is just a i think the situation is only going to get worse if america doesn't wake up oh my gosh yeah so it's just and again regardless of what age you are we are in the the business of hope to like, you can do something different about your situation, again, regardless of your age. But when you have time on your side, so young people out there we're talking to, it's so important to look at the future. And the problem is, George, we want everything right now.

We want our life to feel good. We want to do what we want. And saying no to what we want in the moment is not popular. And people, you know, it's so easy just to fall into that instant gratification. And again, we're not saying that you can't have a life and you can't enjoy your life and enjoy your money. But it has to be in a level of a proper order and for it to make sense. And the problem is, is that people, there's not a plan.

There's not a level of intentionality. and it's just living paycheck to paycheck. And you just go through your life and then you wake up at 66 and you're thinking, my gosh, I have nothing saved. So we just don't want that for you. Well, the truth is it's not that hard to be a millionaire. You just need to put a little bit away consistently over a long period of time. Yeah. So the math isn't that hard. It's the emotion, it's the behavior, it's the habits. And so I'm plugging in this guy's $1,300 car payment into our investment calculator. Oh, that's fun. 30 years old, if you started with $0 and you invested that $1,300 car payment into the stock

market, into a good index fund, a mutual fund, at 65, you would have $3.8 million. Is that if you invested every month if you invest 1300 bucks every month which this guy people like this will always have a car yeah for sure they're always gonna have a big car payment and he'd have close to four million dollars you have close to four million yep instead he could be like this poor woman and that's it that's the math for me where i'm like you're choosing to pay to drive a car or have four million dollars like that's that's it but he's out here peddling his wealth hacks ego it's the ego yes that gets the way that's i mean seriously that's that's what happens any bro bragging about his 62 000 car was zero down and here's what's funny too i'll quote

the same book because he talked about how he was a the author was a valet in dc and he said he would park i mean insane cars like you know, Lamborghinis. I mean, just like Porsche, all the, all the amazing cars. And he said, what's funny about being a valet and for majority of people out there, when you see an awesome car, you look at the car and you think that's a cool car. Could I ever drive that car? You start imagining yourself in that car. What do I need to do to drive that car? You're not looking at the actual driver and looking at the man or the woman and thinking, oh, I wonder what that guy. Oh, and you start wondering about the driver.

No, you're looking at the car. So it's even like we kind of puff up ourselves of like, oh, I'm going to drive a cool car because people are going to think I'm successful. They're really not even looking at you. They're looking at the car. And the crazy part is, I've got a friend who's got a really expensive car, hundreds of thousands of dollars, afraid to drive it. Wouldn't you be?

Oh, man. Imagine driving your house around, worrying you're going to get a scratch on the thing. You're parking 19 miles away so that someone doesn't ding your door. I know. We weren't meant to live like this. Mo' money, mo' problems. Amen. And I'd rather have mo' money in the bank than in stuff going down in value.

Let's make good choices, America. This is The Ramsey Show. I'm George Campbell. She's Rachel Cruz. This is The Ramsey Show. The number to call is 888-825-5225. Well, with debt payments and inflation stealing more and more of your paycheck, we know a lot of you out there feel like you're drowning and you're scared to death that you won't have

enough to take care of your family, but you shouldn't have to live with that kind of stress. And if you want things to change, you've got to have your I've had it moment. You've got to try some new things with your money. And that means it's time to try Financial Peace University. This is our flagship money course, nine lessons that will teach you how to beat debt and build wealth. It's everything you wish you learned about how to handle money growing up. And nearly 10 million people have taken Financial Peace University, and they'll be the first to tell you they don't worry about money like they used to. They're in control now, and you can be too.

But you've got to decide that you're done stressing about money and take control. You can start Financial Peace University right now at ramsaysolutions.com slash FPU. That's ramsaysolutions.com slash FPU. Richard joins us up next in Richmond, Virginia. Richard, welcome to the show. Oh, sorry. Let me get on the right line here. There we go. How are you doing? Hi, George. Hi, Rachel. the show. Oh, sorry. Let me get on the right line here. There we go.

How are you doing? Hi, George. Hi, Rachel. How are you? Great. How can we help today? Yes, my question has to do with the rule of 55. I turned 55 this year, and I was wondering how I can access my 401k money without paying a penalty. I currently have an advisor, and his path was to, with my provider, have to take a lump sum. I can't take distributions from it. So he suggested taking the lump sum out, putting a portion of it into an IRA, which I wouldn't touch to 59 1⁄2, and then the other portion would go into a mutual fund,

where that's where I would get my money until I'm 59 and a half. So I was wondering if I did that, will I incur any penalties? Because I told him I don't want a penalty. He said, no, there will be no penalty if you do it this way. My other question is, if that is, will I incur a penalty with that? Will I then have to do what's called a 72T without incurring a penalty? Have you talked to a CPA about this, as far as the tax implications? No, I have not. Okay. It might be a good step, but we can walk you through. What I assume your advisor is talking about is taking part of the lump sum and creating a bridge account, so that from 55 to 59 and a half, that is your money to live off of. Yes. And then we

can access the rest of that through the IRA without penalty. Correct. Right. Yeah, that's his suggestion. How much do you have? In my 401k, I currently have about 1.1 million. Awesome. And is your plan to officially retire? I would probably still work part-time to help pay for medical insurance because my employer doesn't offer retiring medical insurance, so I would work part-time to help pay for that. Okay. And are you 55 currently? This year, yeah. I turned 55 this year. Awesome. Okay. Well, I'm reading about it.

I know about the Rule of 55. I'm looking into the details of it. It's saying withdrawals must be made in the year that the employee turns 55 and leaves their employer, either to retire early or for any other reason. Of course, it applies to workplace plans only. And retirement plan distributions taking this rule would still be subject to ordinary income tax. So that tells me there's going to be some tax implications here. Okay. So I would factor that into your plan. Okay. Are these traditional? Is this all traditional money? Yes. Okay. Because of course, if it was Roth, you wouldn't have to pay taxes on this. But because it's traditional, it'd be just like your normal 401k, 59 and a half, and you're withdrawing from that. So the question is, do you need this money to get by for the next

four years? Do you have any other savings, any other retirement accounts? Yes, I have a couple mutual funds. All in all, I have about 1.5 million saved. Okay. So you said you had 1.1 in this retirement account. You have another 400,000 elsewhere? Yes. Okay. And you said you had 1.1 in this retirement account. You have another $400,000 elsewhere? Yes. Okay. And where is that? Part of it is in an inherited IRA that I got from my father when he passed away. And the others is my own mutual funds I've been putting money into. I'm wondering, can we tap those and use those to get by for the next four

and a half years? Is your main motivation, Richard, because you want to retire? Yes. I'll retire without penalty. That's my key. I said, I don't want any penalty. And he assured me there is no penalty. I just want to make sure. Yeah, it won't be a penalty, but the taxes,'ll you'd still be paying the taxes at 59 and a half i mean it's because it's a traditional yeah either way you're gonna pay taxes yeah on the growth so whether it's at 55 or 59 and a half um that will be there so yeah i would like to see okay how much taxes will be paid um on the growth i just pay taxes on what i'm taking out of the mutual fund, or would I pay taxes on the IRA and the mutual fund? Now, the IRA, is that a traditional IRA?

Yes. So that... That would be a rollover. I don't know that you... Can you access that at 55? No, no, no. I'm talking about when I take the lump sum from my 401k. You're going to open one.

Oh, okay. And I open up an IRA, which I wouldn't touch at 59 and a half. Yeah, you'll probably be able to roll that over, yeah, and avoid taxes with that if you roll it over to a traditional IRA. But when you take it out and open up a mutual fund, that amount of money probably will be taxable. Right, which is what he told me that. He told me that. Is this advisor one of our SmartVestor pros or is this outside of that? No, it's not. I'm just curious if you contacted one of our SmartVestor pros, or is this outside of that? No, it's not. I'm just curious if you contacted one of our SmartVestor pros, get a second opinion on your situation, and see what they would recommend. Okay, but as far as you know, there wouldn't be any federal, no IRS penalty doing this route.

As long as you're doing the Rule of 55 and only tapping into the workplace plan, it would just be your normal taxes, but no penalties. Okay, and what about a 72T? I'm not sure about the 72T as far as your situation goes. What is your understanding of that? I mean, just something I read on my own that you have to take a set amount out every year for at least five years, you know, based on your age and how much you have saved and that you have to, you know, do it for at least five years. If not, then you'll

be penalized if you were to stop or wanted more money or, you know, what have you. Okay. I'm still going to try to use the funds you have through these mutual funds and the inherited IRA and try to use that as your bridge account and see if we can leave that other money there until we need it. Okay. But I would get that second opinion from the SmartVestor Pro to dig into this more. Because you're, I mean, this is, you know. We're talking about a lot of zeros on the end of this. Well, that, yeah. And it's a big shift, right? If you're wanting to retire, I mean, this is a big life change that's happening and you're shifting your entire nest egg um so i probably yeah i'm with george i would get a second opinion just to double check a couple of things and making sure

that there's not another route because the other you know if you sit down with i mean i don't know what they'll say but a smart master pro they may look at it and be like well no actually if you leave it in here that's actually smarter because you can use this other money here. And, you know, it's like a big puzzle piece is what ends up happening. Or if it's consistent advice, then, you know, that's the right route. But since it's such a big decision, especially when it comes to your retirements and that you're actively going to be retiring, you want to make sure that, yeah, you're doing this exactly right. And we've got to have a full picture of your financial situation, which is, you know,

hard to do in a five-minute radio call. So I don't want you to go, well, Rachel told me to on a five-minute call, and all of a sudden, you know, your life shifts drastically. So I'd walk very carefully through this big decision and get a few opinions before you make it. But also, it's exciting, Richard. I mean, this is, you've done a great job, and you're the opposite of what we were talking about. Another segment of retiring broke. Yeah. I mean, you have it and yeah. And there's a way to be smart and strategic about these funds that's going to help you more and more in the future. So yeah, you don't want to do something dumb and pay more and penalties of something that, you know, is unnecessary. So well done for you and congratulations

on retiring too. But it's a fun conversation for those that do want to retire, quote unquote, early before 59 and a half, because there is a great mix of there's tax deferred, like your traditional, there's tax free, like your Roth, and there's taxable through your brokerage account. And so through that mix, you can create a really cool strategy to go, oh, I can retire at 55 and use this bridge account with this brokerage money without touching retirement. Because most people can't. They don't have the money at 55 to be able to do it.

Yes. For a majority of people. So the fact that, yeah, you're able to. But you're right. There's so many parts of the equation that you want to look at. And you just want to be wise with it because it's amazing. In that world, again, why we love SmartVestor Pros is they usually can find some strategy to say, oh yeah, here's how you can save here. You know, if you take the growth out here and live on that,

I mean, it's a whole strategic play. All based on tax brackets and taxable income. And so it's a very nuanced discussion, but it's one worth having with a trained professional like the SmartVestor Pros. So way to go with your whole financial plan, Rich. I'm proud of you, man. This is The Ramsey Show. This is The Ramsey Show. I'm George Campbell, joined by Rachel Cruz this hour. If you're a new listener to the show, first of all, welcome. We're glad you're here. But if you're looking for a deeper dive on what we're all about,

the Ramsey baby steps, the money plan, you can go to ramseysolutions.com and click on the Get Started button, and we'll help you figure out the best next step for your financial journey based on exactly where you are today. Again, that's ramsaysolutions.com, Get Started button. That's all you need to click. Ray joins us up next, right here in Nashville, Tennessee. Ray, welcome to the show. Hey, how are you? We're doing great. How can we help? Oh, yeah, so I have a question. I'll kind of make it fast.

So I have a collection, and I called the company to see if we can settle on it, and they said no. And the only reason I'm having it is because they upcharged it about 500 bucks of what I originally owed. Upcharges in penalties and fees? I'm guessing. They just sent me a letter saying I owed them, I think, $1,379, but the original, what I owed before that was $849. What kind of debt is this? This is just from a apartment complex about some carpet. Okay, some damage when you left?

Yeah, basically for a pet, even though I paid the pet deposit. But they said something about they still had to change it, but they charged me for it. So can you ask for an itemized bill that shows all of the charges? With the collections or the apartment? Both. Because collections, legally, they have to give you an itemized bill of exactly what they're actually charging you for. Now, I do remember seeing,

but basically they were saying that they had to do the carpet, and they charged me for that, and they charged me for the labor, and then they charged me for some type of sealant because I guess I got a puppy, so, you know, potty training and whatnot. So I'm guessing they said the urine, you know, kind of lingers, you know what I mean, that smell. So they had to, like, coat something across the whole apartment with that. So that's why they said it was $8.49.

Did you check your lease agreement? Do you still have a copy of that? No, I do not. Not emailed nowhere? Maybe in my emails I possibly could. I mean, this has probably been about two, three do not. Not emailed nowhere? Maybe in my emails I possibly could. I mean, this has probably been about two, three years ago, so I don't think I would have it in paper, but I could definitely check my email.

Okay. I'm just wondering if you can go back through there and look through the fine print, even going to the apartment complex and saying, hey, do you guys have my old lease agreement on file? And looking through that and just having a discussion with them. Now, it's already in collections, so they're not going to be able to do anything about it.

They've already sold that debt to collections. But if you can at least get the lease agreement from them, you'll at least have a little more ammo when it comes to what your legal rights are here. Okay. But if you can't negotiate with them, you're going to have to pay it, but I would first at least get an itemized bill to understand what you're paying.

Yeah, because you want to be able to look at what the collections with the fees and all that to be able to, because that will give you ammo as well, being somewhat knowledgeable of what this is. Like, hey, well, let's just take off this and this off the line item and reduce it here, you know, as you kind of start the negotiation versus just hey will you just give me a lower payment uh so as much information as you can have ray it's really going to help you but yeah see what the pet policy is um did they refund you your safety deposit like when you um safety deposit no ma'am they kept it yeah so that feels like you shouldn't have been charged extra on top of that

if you already they kept your deposit so again that lease agreement is going to tell you everything they need to know because that's what they are legally bound by it's what you're legally bound by and it may not be worth fighting i'm not saying you should go to small claims court over this do you have the money to pay it yes i do okay so at the end of the day yeah if it if nothing budges i would just pay it and we call it stupid tax around here and stuff that you're like dadgummit i guess this is a puppy tax at this point is the dog still with you yep yep she's still with me i think the dog needs to pony up and pay for this yeah i wish i wish you can get a job. It doesn't work like that. What kept you from paying it the last three years?

Did you forget about it, and then you got a letter and realized that you owed it? Well, I actually bought a house probably about an hour away from Nashville. A couple months go by, and I just get a random letter, and I'm just fixing up the house and stuff, so money was a little tight. I kind of just blew it off, you know what I mean? Gotcha. Yeah, so looking at the lease agreement, kind of just blew it off, you know what I mean? Gotcha.

Yeah, so looking at the lease agreement, like George said, is going to help, but there may be a factor in there, Ray, that, yeah, if it's enough damage, you may be the one liable for it. And then, again, seeing the itemized, what the collections, what they added on to it, because they may have had some type of small interest on it, you know, as the months go by. $500 feels like a big swing there.

So I think if you have the proof that it was $849 and you have that itemized and you say to collections, hey, I'm not paying this until I see an itemized bill because what I'm seeing is $849, which I'm happy to pay, but I'm not going to pay this extra $500 without knowing what it is. Okay. Have you tried the thing of kind of the tactic of like, hey, I have $849 right now. Will you just take it? Yeah. Yeah.

I tried that. I tried to negotiate. You know, can we just come to a price agreement? I could pay it today. And she said, okay, let me take a look. And she said, no, there's no option for that right now. I would call back. I mean, honestly, Ray, most collection agencies,

just think of Office Space, the movie, where they're just in a bunch of cubicles. It's soulless. They don't want to do this job. And that lady you talked to, honestly, probably isn't going to be there in 90 days even. I mean, like the turnover rate, all of it. So I would almost just keep trying, get the itemized bill.

Ask for the supervisor. That's always the pro move. Yeah, keep calling and asking because you could call tomorrow and they could give you a different answer. That's true. Depends on how you get. So good luck, man. This is a tough situation.

But the great thing is too, right, if you had to pay it, you have the money. So that's the upside on all of this. Absolutely. All right, let's move on to Chelsea in Boise. Chelsea, welcome to The in Boise. Chelsea, welcome to The Ramsey Show. How are you doing? Hey, George and Rachel. How are you guys? We are doing great now that we're talking to a bundle of sunshine. I love it. Well, it's raining here in Boise, so we've got to bring the sunshine. I desperately need some financial guru advice. Well, we are not gurus, but we'll try.

We can help. We will do our best. We'll be your friends who are happy to Google it. I'm a mega fan, so I need it. I'm in a bit of a pickle. So I'm kind of stuck. I'm in baby step two currently right now, and I find myself in need of replacing a transmission,

which is fine, or buying a new car. And I don't know what to do when I'm stuck. Okay, how much will the transmission be? Okay, so right now we're looking at $3,000. Supposing that's all that's wrong with it, if it's not like an engine rebuild or anything like that. Okay, how much is the car worth? The car is only worth about $1,000 to $1,500.

It's a 2003 Ford Explorer with about 212,000 miles on it. And you've checked the Kelley Blue Book value on this for private sale? Yeah. And it's about $1,000. Yeah, about $1,500 if we were lucky. Oof. Yeah, I would say the $1,000. Yeah, about $15,000 if we were lucky. Oof. Yeah, I would say the $3,000, honestly. I'd probably sell it for $1,000.

Sell it for $1,000. And take $3,000, $4,000 and buy another car. Yeah, get a $4,000 car. Well, so the caveat is we have about, according to the EveryDollar app or the Baby baby steps app that we use which is fantastic by the way um it's about we have about 22 uh thousand dollars in debt so that's kind of where i'm caught up we have about nine thousand dollars but we're using the envelope system um and so it's like wrapped up in like different subcategories so if we had a we had to liquidate everything we could, and we would have about nine in cash. What would you be liquidating?

Like different categories of the envelope system. So it's like wrapped up in like- Oh, like different sinking funds? Yeah. Okay. Yeah. Well, I mean, in this case, Chelsea, we always say, you know, this is part of your four walls. So a car that runs is is an essential we would we would consider that a need so for the time being what i would do since you guys are in baby step two you know it's yeah it's a you know you could sell it for a thousand bucks uh and then maybe take two thousand and go get another three thousand you know three thousand dollar car to get

you through some of the baby steps so that you're not depleting all. I don't want you depleting all of your savings. But also, this nine grand could start going to this $22,000 in debt as well. So we do have another car. My husband works four jobs. So he has, yeah, he's a firefighter and EMT. He does it lesson. So we have a Ford Explorer that's a little bit newer, not by much, but we do have two cars. So we could sell one and just go down to one car. I like this plan, Chelsea. You could do that too for a bit. Temporarily.

To be a one-car family, yep. Until you save up and you get a clunker that gets you around for now. Remember, it's all temporary. We're going to be out of this pickle real soon. Appreciate the call. That puts this hour of The Ramsey Show in the books. Hey, it's George Camel. If you like what you heard in this episode and want to know more about getting started on the Ramsey Baby Steps, go to ramseysolutions.com and click on the Get Started button. We'll help you figure out the best next step for you based on your specific situation. That's ramseysolutions.com and click get started.