The Ramsey Show - App - Your Credit Score Shouldn’t Be Your Motivation (Hour 1)

Episode Date: August 10, 2022

Ken Coleman & Rachel Cruze discuss: Selling a business, Using a loan to pay off credit cards, The baby steps, What to do when you've bought too much house.   Want a plan for your money? Find out where to start: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6

Девочка-пай Live from the headquarters of Ramsey Solutions, this is The Ramsey Show, where we talk about your life, your money, your work, and your relationships. I'm Ken Coleman, joined by my colleague, Rachel Cruz. We are Ramsey Personalities, and we are here together for you this hour. The phone number to jump in is 888-825-5225. 888-825-5225. Now, Rachel will focus, obviously, on the money questions. I will chime in if possible. And I'm here to help a little bit about your work today because your work and your money are absolutely connected.

And we want to help you win in both areas. So if you need a bigger shovel to be able to pay debt off faster, get through those baby steps faster, I want to help you with that if you're in a toxic work environment. That affects your income.

So we'll help you with your work and money specifically today, but it's always fun to be with you. So exciting to see you. I know. We haven't co-hosted together

in a while. It's been quite a while. It's great. Is it my cologne? Is it a little off-putting? Just like, don't put me with Ken. Whenever I host, don't put me with Ken. It's too much. It sears the irises. It's too much. Well, we're excited to be together. We're going to start off north of the border. Ontario, Canada is where William joins us. William, how can we help? Hey, guys. I'm good. How are you? We are having a blast. What's going on with you today? Well, I have a question that sort of wraps a few things into one, but essentially I'm

wondering if I should sell the shares I have in a company I co-own in order to pay off our mortgage and have more time for another small business that we kind of have going on the side and want to grow. Wow. Tell me about the business. So the current one that I'm partnering two separate businesses. It's a internet, rural internet business that we run. So we sell internet to people out in the country. So yeah, something we started two years ago ago right before COVID. So it kind of exploded when everyone moved to working at home. So it ended up working quite well. And what we want to move towards is a small farm business that we've kind of been doing on the side already.

And I'd like to have more time to do that. Sure. What is your income right now, your main source of income? Is it this Internet company? So that would probably only be about 10% of our income, and then the other business I own is a security, home security and business security business. Okay. So that's probably about 80% to 90% of my, gotcha. So if you sell the shares of this internet company, will you still draw income or does that mean you're completely out as an owner?

I would be completely out. What would you make on the sale of the shares? About 350. How much do you owe in your house? $320,000. Wow. Pitching good position, William. So if I'm hearing everything right, you cash out of this business that you don't want to be in long-term, and you're only drawing about 10% of your income from that anyway, and you've got a side business in addition to the security business. You've got a farm business. That's your long-term goal. So if I'm hearing everything correct, this makes you completely debt free and you get out of a business that you don't want to be in anyway is that what i'm hearing yeah that's right and rachel i guess well my question is what's the hesitation like what what because to me i'm like i kind of kind of feels like a simple answer uh just being the

third party listening in so what caused you to call and ask like, what's your hesitation? Well, I'm only 26 and this is kind of the third business I've been part of already since working with the boss I started with. Um, so I'm just, my wife and I are both kind of worried that this will be a pattern moving forward that I just start something kind of lose interest and just keep doing a cycle like that okay so just trying to figure out I guess if there's just something I'm going to keep doing or like financially it seems to make sense right now but I yeah yeah is the is the business growing are you guys making more and more and how much time do you spend in that business the internet business uh the internet one it's not growing too much right now okay um do you spend a lot of time in it no no okay okay because i was gonna say you know if you're not spending a ton of time and it's like skyrocketing would you hold and wait and and then buy out in two years you know what i mean when

you're making more that could be the other side of the argument sure but I think where you're at today I think kind of and I think to simplifying your life William you have three things going on so part of me would almost just not even want the hassle of it and you said like it's not even growing that much so it's not like you're going to miss out on a ton of ROI in the next few years like getting out now feels like the right move to me. Yeah. So there's two things. I hear what you're saying. I think you and your, does your wife have the concern or is it your concern that you're this, well, I'm this serial entrepreneur and I'm starting and I'm quitting and I'm starting. Is that mostly coming from you and she kind of sees it or is this a joint belief? That's what i'm curious about i think we both um see that

equally on my side it's just i'm worried that i'll never be happy with one one thing necessarily and for her it's more the stability no question no question okay great so a couple things uh number one uh i want to know how long would it take you to pay off a house if you did not cash the stock in? So let's say you guys were to keep paying it, going after as hard as you could, but just from traditional income, not selling the stock in this company. How long would it take you to pay off the house? I'm thinking seven to 10 years. Like we're probably a little tight right now with the mortgage on the house that we have. All right, so I agree with Rachel.

I'd go ahead and do this. This is a solid move. You're 26, and you'll have no debt, and no longer are we tight with the mortgage. But let me address the concern. First of all, I understand where your wife is at. So I've been married 24 years. I'll have to always be addressing that stability issue and her safety but you've been very very successful and what i'm

most curious about is how much the two of you are excited about this farm business is she equally excited about that how big of a passion dream is that yeah she's very excited about it and sees herself working in that as well doing different things and we already do a little bit of it and we have the hobby farm well so here's the deal if i'm sitting with the two of you at your dinner table tonight uh just kind of big brother in it i'm telling you to cash out because this is going to fast forward the dream of working on the farm, having lots of options. You want to talk about stability. And I would just speak to this that, hey, babe, this is an equal dream for me too.

And this is going to, when we're no debt at all, we're going to be self-sustainable, not just financially, but even the ability to just live off the grid, if you will. So I think stability is the message here. I think this is the move for stability, Rachel. Yeah, and to speak to the discontentment part, William, there's a part of me that kind of just wants to release you from that, to say, like, I think that there's, now, I'll say this, there's having enough self-awareness that if you know that about yourself,

that's good. So I think having the awareness is huge. But I'd also say there's two camps of people. Number one, there's a camp of people in their 20s who are still figuring out what you want to do with your life.

The fact that you kind of moved around, that doesn't bother me a ton. Again, with the self-awareness of, oh, is this discontentment? But figuring out what you want to do and then the camp of people

because we have a friend like this and he's just great with ideas, starting something and he'll start something and he moves to the next one. It's like what he does as a job and it's not necessarily a bad thing. So discontentment, I think great self-awareness, but also don't be down on yourself because of the moves you've made so far. I think

it can be very normal. Yeah, William, I think Rachel made a wonderful point. You're a starter by nature, and you need to lean into that. That's not a negative thing. Just don't start something that you don't care about. That would be the only filter for you. Appreciate the call. Sell it. Pay off the house. That's exciting conversation here on the ramsey show i'm ken coleman she is rachel cruz and we're here for you. 888-825- 5-2-2-5. That's the number. It's toll free. 888-825- 5-2-2-5. Let's go to the Big Apple, New York City.

New York Brian joins us there. Brian, how can we help? Yes, how you doing? Thank you for taking my call. Sure. Should I take a consolidated loan or a personal loan to pay off credit card debt in efforts to improve my credit score and build credit history? I'll give you the short answer.

No. And I'll tell you why, Brian. You know, when people go to shift their debt around, there's one time that we actually say that it's not necessarily a terrible idea. And it's if you have, you know, a larger debt, but you're able to get a loan that's less interest rate, and you're, you're in the works to pay it off. Then sometimes we're like, you know what, it makes sense. And you can do that because your behavior was already that I'm going to be paying this debt off. But just hearing your question and the motivation why to do that, I would say no. Because our goal with our money, at least what we teach on this show, is to be completely debt-free

and not to be at the mercy even of a credit score. And so we even teach to the point that you become debt-free. And within around 12 to 18 months after you become completely debt-free, that credit score starts to actually go down to undetermined and you end up not really even having a credit score. So that's something that we talk about on the show. So in order to improve a credit score is not a reason we would do a financial move or what I would suggest that you do. So what kind of debt is it in general? Is it all credit cards? Yeah, it's all credit card. It's only around $7,500. I don't have a lot of credit history, so I thought paying back a loan would help

show some type of credit history. Yeah, and it would. But again, my goal for you then, my goal for you is to still just pay this off and not to work your money and your financial plan around the credit score because you can still today live life without a credit score. You can even get a mortgage without a credit score through manual underwriting. So I don't want the credit score to be the motivation of why you do things because it's basically an I love debt score. Every way that your credit score is calculated is an interaction with debt, whether it's the type of debt you have, the new types of debt you bring on, how often you pay your debt. I mean, it's all calculated around debt. And again, having no debt and being completely debt-free gives you so many other options in life and such freedom, which is what we talk about on the show.

What's your plan to pay off the $7,500 if you were not to get a loan? You got a timeline? I do. Probably in the next 12 months. I have the money to pay it off. I'm paying it off little by little. My long-term thing is I'm stuck at a credit score at like 660 for a long time.

And I want to raise that. i guess i'm focused on that credit score but also i want to i want to show that i could pay a loan off because i do want to get a mortgage in the next you know 24 to 36 months so i'm just wondering how how to well you don't need as rachel's addressed this you don't need a credit score to get a loan for a house. That's a cultural myth, number one. Number two, and again, Rachel's made this very clear, and I agree with her 100%, but you realize your credit score will go up when you pay off the credit cards momentarily.

You know, because it showed that you paid them off. Well, it jumped for a short amount of time. It shows that you paid off their credit cards. How much money do you have in savings right now? You guys are going to get mad. I have enough money to pay off the debt. I have around $9,500 in savings. So I know it doesn't make sense probably.

I know I should just probably pay that off, but it's like that cushion to know that I have money in savings. I guess that's why I'm holding on to that. How much money do you make? What's your salary? What's your net take home? $85,000. Okay.

Rachel, I mean, he can replenish that. But I have some expenses monthly. Yeah, but you can pay off his credit card. What other debt do you have, Brian? I just have a car lease and child support. Okay. That's my main two monthly payments. Yeah.

Well, if I were in your position, I probably wouldn't be buying a home in the next 24 months. I think it's going to be a little bit longer for you just from, again, doing it in a way that all of this is a blessing and not a curse. And our goal was for you to be financially free, to be able to build wealth. And the fastest way to do that from point A to point B, what we found is being completely debt free. So yeah, paying this off, replenishing that emergency fund, because I get it. And we hear you that like, it's like, oh my gosh, I'm only gonna have $2,000. We even teach it, just have $1,000 emergency fund and pay all your debt off. And that urgency there will also be the motivation for you to build up that emergency fund that much faster so building up a three to six months worth of expenses and then a good down payment so again it may take i

mean you could you maybe be able to do that in in two years depending on all your living expenses being in new york you're in an expensive place um but yeah being able to get out of this car lease all of that just being completely freed from payments and this car lease, all of that, just being completely freed from payments. And Brian, we've studied this for over three decades and have been focused on people building wealth, lasting wealth. And the whole idea of the credit score, I just got to tell you, it is just part of this toxic money industry where they keep you in this system. And again're you have to continue to accumulate new debts to continue to up that credit score as well there's there's different

parts of this equation and so again playing that game over and over and over at the foreign it doesn't get you to a point where you really can build wealth fast in a sense from point a to point b in the right way um so i just wouldn't i wouldn't play the credit score game i really wouldn't brian if i if i woke up tomorrow and I was you, I'd pay off this credit card. I would see about the car lease, which is a whole other conversation, figuring out, can you get out of it? Is there a buyout? Where are you at in the car lease? Get out of that focus. Yeah. The child support, making sure that that's funded and paid for, and then start saving up for your emergency fund. And I would just continue down the baby steps. Because again, it is the plan that we have found

has created wealth for people and had a level of getting out of this toxic money culture that so many people are stuck in. And I just, oh, and Brian, this is not at you. I was not disgusted at you. I'm just, the credit card industry is just frustrating. It's frustrating keeping people in the cycle of just being in it. And's like and even on tv i'm

like you see all these commercials all these celebrities and they're promote all cash back you know all of this stuff and i'm like speaking to the population that's like okay i'm gonna pay extra money for a middleman to use money that i don't have and then you get stuck in it when you actually look at people paying living paycheck to paycheck and you look at the interest rate on these credit cards up to 25 30 can be and then you look at the math and it's like and that keeps compounding if you miss a payment and you don't pay it off in full that interest is added on if you're already living to paycheck to paycheck you're already dug in a hole and they just feed the industry feeds off of that part of the population,

and it just makes me mad. Well, it is a myth. And they make so much money, too, by the way, America. They're making so much money. It's a game, and they're winning. But, you know, a mortgage company does not care about your credit score. They care about how much down payment you have, and do you show a financial history where you're stable.

He's going to be able to say, hey, I paid off $7,500 in credit card debt. I've got a 20% down payment. And that's why we endorse. And here's my income. Here's all my other bills. All the things. My cable, my cell phone, everything. That's what they're looking at.

Yes. They're not looking at credit score. And, you know, it's, I don't have a credit score. You know? I don't have a credit score. You don't have one either. So it's like, but no one, you know, that doesn't mean credit you don't have one either so it's like but but no one you know that doesn't mean that you don't have financial stability and i think that there's this cultural myth that you look like a flake when in all reality if you do what you just told him to do

brian brian if you do what rachel said you're not going to be looked at as a flake you're going to look at as somebody who yeah i'm happy to give you a loan and here's the insane thing about the credit score too to your point that people believe like okay that means i'm good it's like this number of i'm good quote unquote with management it's like a status something yeah and i'm like brian's great great aunt's dog walker julia who he doesn't even know left him in her will yes she dies tonight he wakes up tomorrow he gets a phone call and he's they're like you've inherited six million dollars your credit score is still exactly the same number, Brian. This is true.

She makes a very good point. You could have a net worth of millions of dollars more. And it doesn't change your credit. Like, it's not an indication that you're winning with money. It's an indication that you're hanging out with the bank and just in debt and doing all this stuff. I love it. I love angry Rachel. Folks, by the way, this is like her actual anger.

It's not even real anger. It's just like a character on Saturday Night Live, and I'm here for it. Here are my kids. You might see my real anger. Well, that may be true. But she's right. You're not a loser if you don't have a credit score. In fact, you're not playing in the Matrix, and that's a good thing.

All right, hang on. We've got to do these things called commercials, but Rachel and I will be back real soon. This is The Ramsey Show continues from our Ramsey Solutions Worldwide Headquarters in Nashville. I'm Ken Coleman. Rachel Cruz joins me this hour. We're here for you. 888-825-5225.

That's the toll-free number to jump in. Look, I'm a man of the people, Rachel. I'm always reading the news. Yes, you are, Ken. Trying to stay in touch. Just like all of us. You are, too. You're a woman of the people.

A woman of the people. We have shows. Rachel Cruz show, the Ken Coleman show is a part of the Ramsey Network. And so we're communicating with our audience. So I'm always reading the news on what's relevant in the world of work. How's it affecting you? So the bottom line is, is it scary? I mean, I look at the headlines and I actually know what's going on

because I'm reading everything. And the fact is we're in a baby recession. We had an unbelievable jobs report in July. 500,000 jobs created. We're at 3.5% unemployment. It dropped a tenth of a point. Okay. So can we talk about-

Isn't that amazing? Yeah. But you would think that the world is coming to an end. For sure. But I want to hear from you because we haven't even talked about this. I'm sure you talk about it on your show all the time because I listen to every episode of your show. You got three kids.

And you're my friend why would you listen but like ever since and like 2020 was an absolute change in the way where i mean like it will be down in history when you look to see what came out of covid the workforce just changed completely and so when we look now i'm like yeah all the job numbers, which is crazy during a recession because that's usually the thing that gets hit. And then you're seeing all these new ways. And I even know even like teachers, right? The teacher shortage that's going on. Oh, yeah.

And I'm like, it does feel crazy, though. But then the numbers are not lining up with the crazy feeling that I'm having when it comes to career. Does that make sense? It totally makes sense. So what's going on? So, well, we've got this weird set of things. We've got some negatives in the economy and some positives. The negatives are inflation, obviously, historic inflation. Although we are starting to see gas prices, grocery prices are starting to subside a little bit,

but that's what we've been facing. You've got these weird dynamics of, I'm hearing about inflation, I'm feeling it in my wallet. And then I start hearing about recession and people just, it's like the boogeyman. People freak out. So that was one thing happening. But then over here, you go, wait a second. We've got record low unemployment, 3.6%. It dropped to 3.5% in July. We saw in May, 370 some thousand jobs. June, 390,000 jobs added. And then July 500,000 jobs. Stock market goes bongo this morning when the report came out from July. So the stock market back up really high. So you get this weird dynamic where the economy is kind of bearish, but the stock market is back to the bull. And so it's like people are confused. And so what you're

getting is all these headlines designed to make you click. So you're like, what's really going on? And here's what's going on. Wages are still at an all-time high. You had another 4 million people quit their jobs in July. So bottom line is, it's not all bad. Yeah. I mean, you're hearing negative things all the time. But if you look at the actual economy, it's a baby recession. So here's the point. You don't need to live in fear of the headlines. But if you're at a point where you're saying enough is enough and you're tired of the headlines giving you kinds of negative emotions about your money, you're going, I can't control it.

Well, you can control the controllables and we're here to help you do that. So we want you to try Financial Peace University. The proven step-by-step plan that has helped millions get control of those controllables. That's you and your habits. If you follow our plan, you will beat debt and build wealth. The only one who can say you can't is you. So if you've had enough, stop living in fear of the headlines and the politicians. Take control of your money.

Start FPU at RamseySolutions.com slash enough. That's ramsaysolutions.com slash enough. Chattanooga is where we go next. Derek is there. Derek, how can we help? Hey, guys. Thanks for taking the call. How are we doing today? We're having a blast. What's going on with you? Not much. So long story short, I discovered you guys about six months ago, and I think I'm on baby step six because I'm single with no kids. So do I just ignore that? And then really what would be my path forward? Just keep going how I am or do I need to change something up? Yeah, Derek, great job, by the way. At 32, it's so impressive.

So how much money do you make a year? $105,000. Nice. That's great. What do you do? I'm a project engineer. Okay. Very cool. Yeah. So to answer your question yet, you would skip maybe step five. No need to fund kids college at this point. Are you investing into retirement 15% of your income? I was a few months ago. I started a new job and I'm not eligible for their 401k program yet.

Okay. But obviously, once I get to that point, I plan on continuing the 15% into their 401k IRA with their company match. Yeah, that's so great. And do you have a Roth IRA? Open? I don't have a personal one. Okay, yeah. open um i don't have a personal one okay yeah my previous company they offered a raw yes okay yeah so there's the roth 401k and then a roth ira which you'll just do individually regardless of what business you're at so that as long as you're making an income

uh that's another great option to have because again it grows tax-free um it's another great place to put your money. If the 401k, you take the match of that and then anything other than I would go ahead and max out your Roth IRA once you have opened that and then go back to your 401k if there's any more of that 15% left. So yeah, so funding that, focusing on retirement, skipping maybe step five, and then yeah, throwing the rest at your house, Derek, and getting that paid off you know we always say you know as soon as possible but it's not this intensity that we talk about in baby step two when you're paying off your consumer debt so um but you're in a and I would just encourage you to you're in a great position just in your

life stage of being single not having kids to just you know say hey if there's a margin I'm going to just throw it at the house because if there's a margin, I'm going to just throw it at the house because if there is a marriage in your future and kids in your future, if that's something you're wanting, uh, being set up and, and being able to go into those seasons or if not, but just the earlier paying off that house, I think is so smart. So you don't have to go crazy, but I also would, would have an aggressive goal to pay it off. And you make a great income. I mean, $105,000 a year. So knock that out quick. Yeah. You could really, really strip your lifestyle down and just say, hey, I'm going to knock out that house. And then beyond that, then Derek, yeah,

you're just funding more into retirement, investments, giving, continuing to give even up in your giving at that point and maybe step seven and enjoying some of your money. But you're doing exactly what you should be doing. So you're doing great. I would just encourage you to open up a Roth IRA. If you don't have a good investment professional in your life, I would find them. We recommend people all over the country. They're smart investor pros. So you can go to ramseysolutions.com and find one in your area. But I would recommend sitting down with one of them and just re-looking at your retirement, making sure that your money's going as far as possible, and considering how young you are. The earlier you start, the better off it is. You really highlighted the point here that he's going to have so many options

if and when kiddos come along by paying off the house and being young. He's got some upward mobility in the type of work he does as an engineer. So his better income days, I think, are still ahead of him. And, you know, for parents are going, oh, you know, I'm getting this thing and I'm trying to get control of the debt and I didn't put enough in for the kids. You know, if you just follow the baby steps and get that financial piece, it's going to give you more options to be able to fund things like the college if you're from if you're behind you know or whatever you need to do and uh you know he in his case wow i think the aggressive investing i love that recommendation from you because if he outside of the 401k what you're suggesting i think is huge because the the wife and the future kids i mean that gives him all kinds of options where it doesn't even affect him yep Yep. That's right. That's right. Great job, Derek. Yeah. You've done a great job.

You know, so this, this again, underscores if you're new to the program and Rachel, we have new people, as you know, joining all the time and certainly a lot of young people. We're so excited. We had a lot of young people watching the show on YouTube. And I think this is a key point, you know, to encourage you specifically that what we teach these baby steps, baby step one, all the way through baby step know, to encourage you specifically that what we teach these baby steps, baby step one, all the way through baby step seven, it gives you options. I just don't think this, this generation, you need to hear this. It gives you options, lots of options. It's not just be financially disciplined and like grandma. You all want options more than previous

generations and the financial freedom, what we call financial peace, I want you to hear options, baby, because that's what matters to you and the way you want to live your life. And it takes discipline. It takes sacrifice. It takes patience. But in the end, tremendous options.

All right, stay tuned. Before you know it, we'll be right back with more of Your Calls America. She's Rachel Cruz. I'm Ken Coleman. This is The Ramsey show I'm Ken Coleman my colleague joining me in the studio today is Rachel Cruz with Ramsey personalitiesalities. We host shows on the Ramsey Network, but we are here for you today, taking your questions about money and work. They

are inextricably tied together, that bigger shovel. It's a phrase we use to make more money, to get out of debt faster, to save money, to invest more. So I specialize in helping people win in their work, and Rachel's going to help us win with money today. So if you are looking for a breakthrough, you just need somebody to carefully guide you through some practical steps to help you win, we'd love to be your guides today. 888-825-5225, 888-825-5225. Abraham is up in Fort Collins, Colorado. Abraham, how can we help?

Hey, Ken and Rachel, thanks for taking my call sure um so i'm a recent ramsey fan just this summer uh my wife and i have three kids and we kind of made it to baby step two and totally stalled out um we are way upside down as far as how much house we have and trying to get to the next best step to extricate and keep moving forward. Tell us about the house. So we bought our first starter house six years ago for $230,000 and sold it for $315,000. So we did really well there. Bought our next home for $439,000 and sold it for $495,000 two years later. We like to fix and flip. Then we got our dream property here in Colorado with land and a home, but it was $680,000. So we made it. I actually did a no-no and pulled out my 401k during COVID with no penalties and put that enough to get the down payment. It is now about 48% of our income is our house payment.

Yeah. And we've been here two years and it's, it's a struggle. And obviously we're not, we're not investing. We're not doing anything else but living. So, um, the good news is we don't have, we have about three grand in credit card debt that is it no other student loans or other credit debt okay my question is i know we need to probably get out from under this we could sell quickly and probably get about 850 what we have remaining is 577 on the house or we could continue to do a little bit more remodeling, maybe go into a little credit card debt, and hopefully get around $9,000 to $950,000 next spring.

I don't know. Well, here's the only question I have. As tight as everything is, where are you going to get that income outside of the credit card? That means you're maxing out credit cards just to be able to make these changes. What's your combined income? Is it just you working? What's your income situation?

Yeah, my wife and I work, I make about $105 a year, and she makes about $20. She works really part-time, so we're about $125. What do you do? I buy my dream truck. Oh, I'm in sales,

so I'm a territory sales manager. Okay. What were you saying about my dream truck and oh I'm in uh sales so I'm a sales territory sales manager okay what were you saying about your dream truck I did all the wrong things I think along this process when we were in our last home I bought my dream truck brand new so that's three years old that truck payment is about 500 a month uh what's that worth uh i owe about 33 on it and it's worth over 40 okay so you do have other debt you said you just had the credit cards so yeah that is true okay yeah what's so the truck is gonna go yeah what's the other car or what's it what's your other loan on the car on the other car um the other car we own is paid off. It's paid off, okay.

It's a 2014 Honda. And no, like, personal loans, no 401K loans. I know you cashed it out. I'm just making sure. Nothing else. Okay. So, yeah, car. Nothing else, the truck and the.

Yes. So here's what's so, not fascinating, that's probably the wrong word, Abraham, to use, but our homes, you know, people go into a home, and like you said, it's our dream home. And it sounds amazing, right? You get land in Colorado, you get a home, all of it. Like it's, it is a, it's a sacred place to people because it's where your kids are. It's where your family is. I mean, your home is just such a cherished place. And what ends up happening is this thing that we thought was such a blessing ends up being the absolute biggest burden to you and your wife. Like, I could imagine you're stressed out, you're thinking about it all the time. When you want to go do something fun, it's like,

we have no money to, I mean, it's just, it is a constant sore spot in your life. And so this thing that you thought was going to be such a cherished, wonderful, dreamy part of your life ends up being this burden. And so that happens to so many people,ished, wonderful, dreamy part of your life ends up being this burden. And so that happens to so many people, Abraham. Like, that's not a shameful thing to say to you, but that's the reality and where a lot of people are. So, yeah, if I were you guys, how old are your kids?

They're 10, 8, and 4. Okay. Yeah. So you got little ones. So, I mean, so if I'm you, I am relieving as much stress as possible in my life and doing renovations going into debt for renovations all that adds way more stress because stuff takes longer than you expect it's always more expensive and you're going to use debt which is not even going to be an option that we're going to give you so um if i were you abraham i would i and i

know it hurts but i would i would sell and i would find I would find a home that you guys go back to that it's like okay it's you know it's reasonably 25 percent of our take-home pay you sell the truck you pay off this debt you guys get an emergency fund you get back on solid footing and something else happens too during this process there's a level of realizing man our priorities have just shifted I would rather be in a smaller space with peace of mind and I'm not losing sleep at night than to have what I thought I wanted and be stressed out. And so I would, I would sell and I would, I would find something that you guys can afford. And, and then the great thing too, Abraham is you could look up in a few years and go get land

again. It's not like that this is the only time you never could or that you can. And that truck, you can always go buy that truck again in a few years, your dream truck. This whole thing of being debt-free and getting a firm foundation doesn't mean you can never enjoy stuff or go back to the dreams that you had. You can always go back to them, but you're going to do it where those dreams are a blessing. It's a gift in your life. It doesn't take away from your life. And so what's happened is it's been hard for you guys. I can only imagine. So I hate to say sell it because I know it's a dream of you guys to have land and a house. And I don't see your income going up or her going back.

I wouldn't send her back to work full time unless she wanted to to pay for a house payment. Like all of that. Yeah, I agree with that. I would not. Yeah, I agree with that. It's not worth it. It's just not worth it. Well, you got to get rid of the truck and the credit card in this whole deal. All right? So, like, this is an all-in.

Get rid of all of it. So, you know, you're going to have, what, $7,000 and some change left if you sell the truck? And you can get a decent, older SUV for that. That's just what you're going to have to do. You know? Well, the blessing, Ken, is actually my job came with a company vehicle, so I don't actually need to replace my truck. So that's a really good thing. Okay, so now we take the profit from the truck and we wipe out the credit cards, if I remember that amount correctly. So let's just play some real fun math here. How much is

that going to free up in your budget if we pay off the truck today and the credit cards today? We got $500 a month on the truck. What's on the credit card right now, minimum payments? Minimum payments on the card are about $80. All right. So, okay, $580, but that's $580. That's over $6,000 a year immediately. You sell the house. And here's the thing I want you to hear. And Dave's a great example. Let's use Dave Ramsey's example. So Dave was in real estate. He was doing very well, right? If you don't know Dave's story, the bank called all the notes. Rachel was a baby, you know, and he loses everything, right?

But Dave went back and got into real estate, even bigger than ever, and it's all cash. So you all have experience. See, Dave had experience. And I've heard him say to me before, he's like, it's easier to make the second million than it was the first. And you all have some knowledge. You flipped, I think you said, two houses prior to this one.

So Rachel made a very good point. I want to drive that home. Yes, this is a bit of a contraction, but it's temporary. And now you're going to come out of this, be completely debt free. No stress on mama, you, the the three kids and then you can start that flipping process if you want to get back into that one day but this time you do it all cash because you know how to do it you've been there before so i just want you to be encouraged in the midst of this pain because this is painful and i just want to acknowledge that this is going

to suck to sell this house you know it is it feels like a step back, which is hard for me, but yes, I understand. Well, let's be honest. It is a step back, but it will position you to make so many more steps forward faster. That's the key. You've got to remember that right now because it is a step back. Don't try to sugarcoat it, but it's going to position you, and you're going to come back better and stronger than before and you're you guys are functioning in such a tight budget already that when you free it up even moving homes your priorities may shift you may realize huh what

other options do we have we're talking about options earlier so ariam you're a great dad great husband and i think you guys are make some hard decisions. But in nine months after everything's cleared and done, you're going to breathe again and sleep at night. She's Rachel Cruz. I'm Ken Coleman. Thank you, America, for joining us here on The Ramsey Show. Hey, folks, Ken Coleman here. Did you know The Ramsey Show is one of the most popular podcasts

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