The Ramsey Show - Avoid Decades Of Financial Stupidity With These Simple Steps

Episode Date: February 27, 2024

💵 Sign-up for EveryDollar today - The simplest way to budget for your life! Rachel Cruze & Jade Warshaw answer your questions and discuss: A couple that has $1 million in student loans and doesn't know what to do "My car got repoed today - should I buy it back?" How to enjoy your financial success in Baby Step 7 Why it's so important to do the Baby Steps in order to maximize how quickly you can pay off debt A really difficult call where caller learns the hard truth that she's being financially abused by her husband Rachel and Jade weigh in on a disagreement a couple is having about if they should pay off their mortgage or build the patio of their dreams Support Our Sponsors: NetSuite Zander Insurance USCCA BetterHelp Neighborly Next Steps 📞 Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET or click here! 📊 For help with investing, Get connected with a SmartVestor Pro! 🏦 Take Your 3-Minute Money Assessment - Get a personalized money plan! 🏠 Find a Ramsey Trusted Real Estate Agent ☂️Protect yourself with the right coverage—take our coverage quiz! 🎟️ It's game on! Get your ticket for Total Money Makeover Weekend.  Listen to more from Ramsey Network 🎙️ The Ramsey Show   🧠 The Dr. John Delony Show 🍸 Smart Money Happy Hour 💡 The Rachel Cruze Show 💸 The Ramsey Show Highlights 💰 George Kamel 💼 The Ken Coleman Show 📈 EntreLeadership Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

Девочка-пай Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work they love, and create amazing relationships. I am Rachel Cruz hosting this hour with Jade Warshaw, And we are here to take your calls And you can call us at 888-825-5225 And we'll be answering your questions On life and money And career, relationships

All of it, all of it So let's get to the phones this hour We have Amy in Pensacola Hi Amy, welcome to the show Hi, how are Welcome to the show. Hi. How are you? We are doing great.

How are you? Good. How can we help? I'm really, really excited to be on the phone. I have a bunch of questions, but my husband and I are definitely in need to help with overall financial plan. We have more than over a million dollars in debt. What's it in? What's the debt in? Well, we went through a really long school life. Okay. So our student loan was a million when we graduated. Oh my gosh. Wait, you can't just cruise past that.

You got to tell us more. What are your degrees, Amy? So we are both in dental specialist. So, you know, college, well, we actually didn't have any loans for college. Dental school, we had loans. Specialist residencies, we actually didn't have loans because my husband served in the military.

So they pay for that. So just then, four years of them alone, we have a million dollars together. Okay, but you earn a lot of money, right? I sure hope so. So now we came down to like $750,000. So we're proud of it. But since he's in the military, we don't actually earn that much money. But the good news is he's getting off of military and we're going to start a new job where we should, our minimum income will be about $600,000. Okay, so wonderful. That's good.

Is this a business that you're opening a practice together? Is that what it is? Actually, no. So we wanted to make sure like our life is in a little bit less of a mess before we even think about opening our own. Sure. That would require a lot more capital. You just said we, so I didn't know if you were working together or you're just going out and getting separate jobs. We are working together in a practice together, but we don't own them. And combined, you'll be making $650,000. That will be a minimum, yes. When does that start? Summer. Okay, so soon. And these are guaranteed jobs and salary, like this is what you're going to make? Yes, so it's a per production. So, this is what you're going to make yes so

it's a production so you know that's going to be a minimum and if you make more you know you you're going to get more well that's the great news of this story amy so for you guys i mean i would work to live on 70k uh-huh and you throw everything at this debt and you get it paid off in a year and a half and be done and then go right off into the sunset making six hundred thousand dollars a year debt-free like your numbers sound really big but ratio wise it's the same as the person who calls in and makes sixty thousand dollars a year and has a hundred thousand dollars of debt like that's right it's it sounds a lot because a million dollars is just a big number, but the ratio is the same. How are you living right now? Tell me about your

numbers right now. What is rent cost? What are you bringing in right now? So that's another question. Thanks for asking because that will be my next question. Because we now technically own a house but not pay off okay so we are planning on well in the beginning before I started listening to you guys show I wanted to either rent this place and buy another place in our new job will be because we have to move and buy another house. But then I was thinking that our ceiling was so high, we decided to sell this house, pay all the mortgage. If you sell it, what will it bring? It doesn't bring much because our financial advisor told us to pay as minimum as possible, so we actually didn't pay that much off.

Okay. We bought this not that long ago, actually, not even three years ago. minimum as possible so we actually didn't pay that much off okay we bought this not that long ago actually not even three years ago so we are trying to sell this and then okay how am i talking real numbers because right now you're saying like it's it's all kind of up here I want to know real numbers if you buy if if you're moving give us more details if you're move where are you moving from and then where are you moving to if you're moving, give us more details. If you're move, where are you moving from? And then where are you moving to? If you sell the house, how much will it bring? And what do you plan on doing with that money? Like, give us a few more details so we can really

dig in with you. So we have a mortgage to left for about $370,000. Okay. So you owe $370,000. If you sell it, how much will you take home, do you think, after the sale? Maybe $40,000. And that's after fees and whatnot from the realtor and everything like that. Okay, so the $40,000, you're thinking you're going to roll that into a new mortgage when you move this summer for this job? Is that what you're thinking? We were thinking that, but now we're thinking that maybe we should just rent a place. Uh-huh. I'm thinking that, too.

Yep. Yep. Yeah. And that's $40,000 more to the student loan. Yay, yay. That makes some progress. Yeah. So, Amy, here's going to be your struggle.

It's not going to be income. And usually when we're talking to people like this, we're like, you got to get side hustles, all this, all this. And honestly, with what you guys have, you can have this paid off in a year and a half. Yep. But your problem is going to be, Amy, that you guys are going to, if me and Jade were in this position, I would just tell you, like, both of us with our spouses, our decisions would probably be very similar.

We're getting a one bedroom apartment. We're living as cheap as possible for two years. And Amy, the biggest struggle that's going to happen is you're going to get into this new job, into this dental world where people are making insane money, which is great, and they should. They do great work. But they're going to be living insane lives.

I mean, to make $600,000 a year, the trips. It's crossing season. Yeah, the trips, the cars, the out to eat, the parties, the games. I mean, everything you could imagine, Amy, is the world you're about to step into and you're not going to be a part of it. And you're going to say for a year and a half, 18 months, 24 months,

we are not going to live like we make $600,000. We're going to live like we make $60,000. And I'm telling you, the faster that you can just stay in this mentality and get through this, Amy, the unbelievably better part this is going to be. Not only are you going to appreciate that $600,000 even more, but you're done with this mess.

I mean, yes, your shovel is big and a million dollars is big, but it's a million dollars, I think, to anyone. I mean, it's a gasp. It's a lot. And if you just act normal in this, you're going to keep this around for five, six years, and you'll make the payments and you'll figure it out. But it's just going to be floating where we want more intensity and be done. And then you can go get a bad day home.

I mean, you can get so much. Here's the upside. You can do so much with this. The upside is you're moving somewhere where you're brand new and you don't know anyone and you don't have any heirs to keep up. Like, do you know what I'm saying it's harder if you had been if you had called us and it was five years later and you were in this job making 650 you had the house you had the cars you were used to this lifestyle and you had to cut back it'd be difficult but you haven't even got into it yet so you and you don't know anybody yet there's no standard to keep up like you can fly

under the radar do your thing and then after a year and a half you can pop out like, what's good? Let's take a trip. Let's spend some money. Amy, the faster you get rid of this, I'm telling you, the faster that burden lifts. And you guys, I'm so glad you found us. I know you're a new listener, but I'm

telling you, this is the proven plan. So do it. Do it well. We're excited for you, Amy.ats on the big education and the big salary but make some right decisions here this is the ramsey show what does the future hold for business ask nine experts and you'll get 10 different answers economic growth or a recession business taxes will go up or down. AI will help us work or it will replace us all. But there's no such thing as a crystal ball. That's why more than 40,000 businesses have future-proofed themselves with NetSuite by Oracle, the number one cloud enterprise resource

planning system. Ramsey Solutions uses NetSuite and you should too. Whether your company's earning millions or even hundreds of millions, NetSuite helps you respond to immediate challenges and seize your biggest opportunities. With one unified business management suite, there's only one source of truth for the visibility and control you need to make quick decisions. NetSuite's real-time insights and forecasting help you see into the future with actionable data. And when you're closing the books in days, not weeks, you can spend less time looking backward and more time focusing on what's next. And speaking of what's next, download the CFO's Guide to AI and Machine Learning at netsuite.com slash Ramsey.

It's free at netsuite.com slash Ramsey. All right, Jade. My favorite season in life is coming up. Do you know what that is? Tax season? Tax season. I'm just kidding. We're both just kidding.

It's the worst. And what's so hard too, Jade, is taxes can be so confusing. I mean, there's all these terminologies. Do I work with a pro? Do I do it myself? I mean, it just is a confusing thing. Yeah. And if you buy what some tax services out there are saying, they think that you'll never

be able to get a grasp on this, Rachel. They think that you're just not smart enough. You need to use them and they'll tell you the truth, but we think that you deserve the truth and we're gonna tell you the truth. And so here's today's tip, if you're ready for it. You have two choices for claiming tax deductions and understanding the difference can save you big bucks.

So basically we're saying, we're gonna teach this to you. You can understand it. It doesn't have to be like this big mystical equation. We can save you big bucks. So basically we're saying we're going to teach this to you. You can understand it. It doesn't have to be like this big mystical equation. We can help you through this. So two choices for claiming tax deductions and understanding these differences. You can either take the standard deduction or the itemized deduction. You've probably heard those two phrases before. Both options can lower your tax bill, but which one is the best?

That depends on your tax situation. So let's take a closer look, shall we? Yes. Okay. Taking the standard deduction is the easiest one, and it's the one that most people do. It subtracts a set amount from your taxable income based on your filing status. So let's say that you're single and you make $65,000 a year. The standard deduction is going to knock off close to $14,000.

So you're just going to pay taxes on what's left, which is $51,000 of your income. It's like a freebie, right? It's like a discount. It's a coupon, if you will. And you can just take it and go, whatever it is. That's right. Then you get a little bit more work on the next one. Yes. The next one is the itemized deduction. And this does take more work. That's because you actually have to subtract all of your deductible expenses from your taxable income. So you're doing this one by one. So you're looking at things like medical expenses, charitable gifts, state sales tax. I'm already starting to fall asleep right now as I'm talking about this. If it adds up more than the standard

deduction, so if it's more than 14 000 based on your tax bracket it's worth it to itemize so that's how this thing works for more help in making sense of these income taxes and filing with confidence you can go to ramsey solutions.com slash tax that is ramsey solutions.com slash tax so great well done well done itemized what do you do standard deduction we itemize We itemize. I itemize all day, baby. Do you? Yeah.

Do y'all keep up well? I feel like I could be writing off more if I kept up with stuff. But it's like the big chunks, like our charitable gift, that kind of thing that we like for sure just do. But I was just talking to Winston about this the other night. I was like, man, I should keep, you know, receipts more and like all of it. But to me, sometimes I'm like, oh, if it's 20 bucks, is it and like all of it but to me sometimes i'm like oh if it's 20 bucks is it worth like actually doing it but people that do it and they and who have jobs in areas

where they can they can uh take some of those deductions it's worth it like you have to be a real like bean counter like you have to be like every which is yeah the way my mother-in-law is so that's perfect she does our taxes it's great great. All right. We're going to the phones. We have a Tord in Hartford, Connecticut. Hi, Tord. Welcome to the show. Hey, how you guys doing? We're doing great. How can we help?

Yeah. So basically, I've been financially stupid for many, many years. And today, my car actually got repossessed. And I was trying to work. As we're talking. Oh, my gosh actually got repossessed. Oh, no. Today? Yeah, I was trying to work. As we're talking. Yeah, literally today. Oh, my gosh. I'm sorry.

It's all right. And my biggest question is, I don't have enough money. I'm getting about four. I don't have any savings right now. Okay. But I'm getting a lump sum from my unemployment, about $4,000. And I don't really have any bills. I'm a truck driver.

I'm over the road. I don't pay rent or anything like that. So it's very easy for me to table a bunch of money. Okay. So my question would be, what is the best approach to this? Should I, I owe about $18,000 in the car. Okay. I think it's worth about, they were selling a used lot about $16,000 in the car. Okay. I think it's worth about,

they were selling a used car about $16,000, $17,000 from my research. So from a credit standpoint, since they already repoed it, would my best course of action is to have them just sell it and then have me pay the difference, which I'd be able to do, or should I get it back?

How many payments behind are you? Like, how much is it do, or should I get it back? How many payments behind are you? Like, how much is it going to cost you to get it back? It's about four payments behind, so minus, you know, $2,000, it's paying $500 a month. Okay. Was it a voluntary repossession toward, or? No, it's just, I was expecting to get the unemployment lump sum a lot sooner to pay it, and I just didn't get it in time. Can I ask what's caused you to be late on payments in general? What got you into this cycle of being late for car payments? Yeah, I've been suffering with addiction problems for many, many years.

I was a closet addict. Okay. No one really knew about it, so I was just doing the bare minimums to survive and support my habit. Okay, okay. really knew about it so i was just doing the bare minimums to survive and support my habit okay and and i'm now uh you know i've been sold for two months and trying to get everything back together again wow congratulations that's that's huge you know we talked to a lot of people who have dealt with addiction in their story because it does usually lead to a lot of financial issues for obvious reasons um and we always want to applaud those of you that have worked this part of your

life, because I think that's, that's the biggest celebration, honestly, even more so than the money. I mean, the fact that you've stayed clean for two months and you're walking this path and doing, doing the work. Yeah. We, we very much applaud you. So we want to be able to help you with the, with the money side, which is why you called. so you're so you're i'm not depressed by it she has good stitching things you sound like you're in very good spirit

like you sound super positive thank you so you owe you owe two thousand dollars in back payments what about the the cost of the repo and everything like that what are those fees associated i don't know at the current moment um i know connect at state law is 25 per day for storage that's the maximum okay and you just started on the high end of the repo 500 you know it'll be about 20 if i was to do it right now i'll be about 2500. well i thought i'll get my unemployment check within the next two weeks what other debt do you have tell me more about your financial situation. Well, that's the good part. Since I've been really bad financially,

I was never able to get loans or anything. I only have about $8,000 of consumer debt. $8,000 of consumer debt? Yes. Okay, is that credit cards? A mixture of credit cards, you know know not paying cell phone bills You know So you have things that are in collections

Or like that you're delinquent on Everything's in collections yes Everything Well I know for me I mean I think a goal would be to get this car back Because you're going to be able to Sell it well I mean you'll only be in the whole $2,000 and it's an asset for you, right?

So versus it just going off in the wind, and you owe $18,000. I mean, yeah, I would do what I can to talk to them and say, hey, in the next, yeah, two weeks. Are you sure that you're going to get this check in two weeks? That's my only fear. You thought you were going to get it earlier, and you didn't. As to government, I'm not sure.

Yeah, are you working now yes i'm working now um how much are you making a month i make about 80 000 a year so about about five six thousand a month okay so the the unemployment was just back unemployment pay like it was a lump sum they owed you on top of what you're trying to get it for two months so it's been a while i was unemployed for about two months i still haven't gotten anything in the back how how how many months ago were you employed like how how long have you been making consistently five thousand bucks a month on your own i just got i've been here for a month okay so what i would do toward i mean if if i were you i because like you said it's the government you're dealing with you thought you were going to have it two months ago you don't

i would hate for you to depend on something that you don't have control over for a big asset like a car that you could be able to get back and sell privately and take the difference and all the things um so if i were you i would you said you have no expenses. I mean, I would try to save, I would work extra, do what you can to save that $2,000. It'll probably end up being, you know, $2,500 after all the fees that you're going to have with it. Those back payments. And try to save that within the next two to three weeks.

And if you get the unemployment check as well, that's gravy, yes. But I would make a plan on my own. And again, this may be you working outside, you know, doing some extra work even outside of your day job. I mean, doing what you can. Because I think owing $18,000 without an asset and you're starting from zero to pay that just seems so much more defeating than getting it back, right? Working a month. But I would call them, contact them, make a plan,

put it in writing. And before you get off the phone, Christian's going to pick up and give you every dollar. That's a budgeting app. So you can see what to do with this $5,000 that you're making every month. Thing one, like Rachel said, get the car back. And thing two is get current on all of your bills.

Cell phone, water, all of your utilities, get current. Yep. And Christian, throw in a total money makeover book as well to get you on this plan because we're cheering for you toward you've done the hard work. You can do 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 in the middle of next week, in the middle of all that grief, like it's just, it is, it's terrible. And 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 so many of the callers that we have been getting i just like in recent months have been new to the show so many people say i've just started listening in the last month or two. And so usually when that happens, it's because somebody they know has shared the show. Maybe they've YouTubed something about money and we come up on the side. But whatever's going on, if you enjoy the show, will you share it with your friends and family? It's one of the best ways to get the word out because we want to help people all over the world now,

which is amazing that we're not just here in America, Jay. Thanks to the internet and podcasts and YouTube, we're all over and we hear from you guys literally all over the world who want to get in control of this idea when it comes to your money and the tool that it is in your life and how to put it in the right position in your life.

Because for so many people, it is such a struggle and it's the thing that controls them. And we want that narrative flipped for you. And so, again, one of the ways to bring that hope and to have other people hear about this is sharing the show. So share it with your friends and family. Subscribe as well. Leave a review on any of the podcasts or shows that you listen to because we read those. We want to know your feedback.

So we are here for you, you guys. That is our job. We sit in these studios day in and day out because we want you to get control. Get control of your money, your relationships, your career, and all of it. All right, we're going to go to the phones, and we have Joey in Manhattan. Hey, Joey, welcome to the show. Hey, hi, Jade and Rachel. Thanks so much for taking my call. I also just want to say I'm a huge fan of you both and the show. So I really appreciate it. Oh, well, thank you, Joey. We appreciate that. Thanks for listening. How can we help? Yeah. So my question is essentially since I turned 18, I've been so fixated on just putting

pretty much all my money into retirement accounts and like stocks. And it seems like I blinked and now I'm 23 years old, still living at home. And I essentially have not enough money to move out and or buy a house cause they're so expensive. So my question is pretty much, is it okay for me to stop putting money towards retirement to save up cash quicker? Because I feel like I'm losing out if I sell the stocks, but that might also be an okay route to go to. Yeah. Yes. Yes to all of it. So you've been living at home. You've been stacking up lots of money, putting almost all of your income into retirement savings.

What do you have in stocks right now? So just in like stocks and mutual funds, it's around $31,000. Okay. So non-retirement is about $31,000. Do you have any other money saved anywhere else? Yes. So I have about a little over $5,000 in like a high yield savings and then also just $1,000 as like an emergency fund. Sweet. So $6,000 that we could call an emergency fund.

And then do you have any debt? I'm guessing no. I do. Unfortunately, I have $19,000 from college. I know that is one of that's the kicking bucket for me. Okay. So just the $19,000, what about a car? No, other than that, I have no, no debt. Okay. So, and how much do you, how much do you make? What do you do for a living? I'm in advertising. So I make around $62,000 per year. Okay. What do you bring home of that pre-retirement? It, it, it comes out to about a little over 45 and change after everything. Okay. So that's good. You have a good income starting out for yourself, not a whole lot of debt, and you've got some money laying around, which is good. If I woke up in your shoes tomorrow, Joey, I probably would liquidate the non-retirement stocks for sure. And I keep the $1,000 set aside that you have. And I take the stocks and some of your emergency fund,

I'd pay off the 19,000. And then with what's left, I'd say, okay, this is the beginnings of my three to six months of expenses. And so the way that I would calculate three to six months of expenses for you, since you live with your family, is I would start looking around at places that I want calculate three to six months of expenses for you since you live with your family is I would start looking around at places that I want to rent and I'd go okay if I were to rent this place how much is it going to cost me along with you know food and groceries and everything like that and I would build a three to six months of emergency fund based on those numbers because

the fact is at some point you are going to move out and you're going to want that emergency fund to cushion that lifestyle right that's true fair enough so yeah so so as we're looking at these numbers i think if you you'll have to pay some taxes on when you cash out the stocks but i would go ahead and just do that um and you have 5 000 in the high yield so i think with everything left you'll probably have i, I don't know, around $15,000-ish. So that could just be your starter emergency fund. You may, as Jade said, as you start pricing out some other things, you may want to bump it up a little bit more. But I would keep that in a high yield savings account and with your $1,000 emergency fund. So you'll have anywhere from $15,000 to $17,000.

And keep that in a high yield savings. Kind of earmark that as your emergency fund and then yeah i think joey your next best step is to be looking around and yeah you may not want to buy right now um whether it's going to take you just forever for a down payment um but renting and i think getting out i think is a great i think that's a great plan i think you know once once you kind of hit that adult uh stage in life and you have your own job and all of it, you're kind of itching and you're a smart guy. I mean, you've been investing a ton, which is amazing,

but I would just let that money work for you. And since it's not retirement, honestly, I would, yeah, I would not put them in single stocks. I would just do something safer with an emergency fund. And then once you kind of figure out, okay, where am I going to live? Then that's when you can press play again on retirement and start putting 15% of your income into that.

So if you had an ideal timeline, what would it be to get out of mom and dad's house? Because I always like having a clear, I mean, the numbers are going to speak to that, but. Yeah, I mean, ideally it would have been yesterday because mom and dad's spaghetti and meatballs are getting old, but probably in the next like year or two. Okay getting old. But probably in the next year or two.

Okay. So what I would suggest in that year or two is start paying your mom and dad something. So that you can show renter's history, which is going to be helpful to you, A, trying to get a place on your own that you're renting. Or if you do decide at some point that you're going to come out of this and buy, being able to show 12 months of rental history is really important. Especially if you've paid off this car and you've gone to the point to where your credit score disappears because you don't have any other money borrowed. That's going to be really important for you. Does that make sense? Okay.

Yeah. So in terms of renting for my parents, is that something that they would have to claim on their taxes? How does that go on record? It's going to be something that they would have to claim on their taxes? Like, how does that go on record? I would just, it's going to be something that you're going to be able to show. This money came out of my account, whether I wrote him a check for $300 or whatever it was, and they cashed it and it was for rent. And so you're going to be able to show that as a renter's history. And it's just something that whenever you buy a house or even sometimes try to get an apartment without a credit score they want to see that you've paid some level of history some level of history and that's just going to be helpful for

you but and i would and i never thought about that yeah and i probably would too joey you know maybe be a little bit more aggressive on your timeline of getting out of your parents house you know maybe do it in six months eight months love it but i would i would i would because i think it's just going to be you know i think it's just good for you and then that's when you have to start making these real decisions where you're like okay i have rent due do i is a salary gonna support me do i need to be looking you start making other critical moves in your life to keep you sustained which i think is really important so thanks for the call rachel real talk yeah let's go back in time you're 23 years old yep there's no winston in the picture no there is

you're just well let's pretend oh i was like you're just there was i was a baby when i got you're just a single shoddy yes yes are you gonna are you dating or going going with the guy who lives at mom's house it would be a want want situation it wouldn't be a i'm not like a black and white deal breaker yeah it's not like a absolutely not um but yeah there there is a uh yeah there's a little piece to the puzzle a little bit of like a huh okay all right you want to know more i want to know more versus if it's like oh no i'm out on my own doing my own life have my own life have my own say there's a level of responsibility there that i think that's another thing when you live with your parents it's these it's these parts of life that you don't even think about yeah that you have to think about when you're on your own i

mean it's everything from having milk in the refrigerator to i mean whatever it is but like there is so much that you're like oh my gosh i have to problem solve a lot in life a lot more when it's this situation so 23 years old we're what about you what about you well let's move the timeline now he's 26 oh yeah joey's 26 yeah joe you gotta move out once the timeline the older it gets it's like it becomes less of like a huh yes and more of like a and you know what the saving grace where we sit today in 2024 the housing market's crazy the rent all the right people like that like we do live in a crazy time. But a roommate's different than living

with parents. Oh, yeah. I'll take a roommate all day. Yeah, get a roommate, Joey. That's a great idea. I know. We have to keep it real. It's tough out there, Joey. You can do this, though. We're glad you called. This is The Ramsey Show. Welcome back to The Ramsey Show. Welcome back to the Ramsey Show. I am Rachel Cruz hosting this hour with Jade Warshaw and we are taking your calls. Up next, we have Tate in Montgomery, Alabama. Hi, Tate.

Welcome to the show. Thank you guys. Thanks for taking my call. Absolutely. How can we help? Well, first off, Rachel, you and George own me on Smart Money Happy Hour, just to throw that in there. Oh, I'm so glad. That's a fun podcast. We have fun. We have fun on that show. Me and my wife, we're on Baby Step 2, and in the past seven months have paid off almost $21,000 in consumer debt. Nice. Nice. Very good. Congratulations. Thank you. And so we've got two car loans left, and we're trying to figure out if we should just stay

intense like we are, and we can be done according to the debt snowball calculator by next April, or if we get the bug of being even more intense and think about selling one and trying to pay cash for another one and I just wanted your wanted your thoughts on that. Yeah okay give us some numbers what what do you owe on the first car what's it worth and the second? Okay okay the first one we owe $29,000, and I'm actually upside down on that one about between $8,000 and $10,000. I could sell it and make probably $20,000 on it. Okay. And the other one, let's see, we owe $21,000, and it's worth about $30,000.

Oh, wow. Okay. And how much do you guys make a year? $150,000. Oh, wow. Okay. And how much did you guys make a year? $150,000. Okay. What's with car number two that it's worth so much more than what you owe on it? Did you put down a big down payment? Yeah, we actually bought a kind of brand new car right after COVID hit and found a good deal and traded in. Family got bigger, so we traded for a bigger one and had a really good equity on the car we traded in. So that one feels like the no-brainer to me since there's money to be made on it, right?

Right. I mean, honestly, Tate, there's a part of me, I would probably keep the one that's upside down. I mean, it's $30,000's a part of me, I would probably keep the one that's upside down. I mean, it's 30 grand, but you guys make 150. And yeah, I mean, you're not out of sorts with the amount of debt that you owe compared to your income. We don't want it to reach over that 50% of what you owe. And you guys aren't there. You make 150, you owe about 50 on your cars. So again, if you guys want to just buckle down and say, hey, for the next nine to 10, 11 months, we're going to pay off these cars and we're going to stay gazelle and

tents and all of it but you know you've paid off 21 000 so far which is incredible but you got another 21 000 another 29 000 so it's like how much do you love these cars or how much right do you just want to be done so if i were you i i would just be done with the the 21 000 make nine go buy a car be done or just curious selling both yeah i have my my wheels are turning i'm just giving you options i'm not saying that you have to do this but i'm wondering what it would look like because basically the amount that you could sell car number two for is the amount you're upside down in the other car so if you wanted to like clean slate this in some way, but that would cause you to...

Have to buy two new cars. Or at least one decent one that fits the whole family. And then you're starting with cash and you're just building up from there. You're not in a rush, so there's time to think about that. Like in the next six months, how much money could you save up

to replace one of these cars in cash? I mean, we're probably, let's see, probably around $10,000 to $15,000. So that's kind of interesting to me. Like there's some interest in saying, okay, if we continue paying our payments and maybe even a little bit more on all these for the next six months, we can look up and say, okay, we feel good about this. We've got 10, 15 grand saved. Let's sell car number two. Let's take the money from that.

Let's clear the upside down on car number one. And then let's buy ourselves a $10,000 van in cash. And now we're off to the races. We have not a payment in the world. And now in the next six months, we can save up another 10 to $15,000 in cashflow, a second vehicle, which would cause you have a six-month limbo when you're a one car family yep it's just interesting to think about you have options yeah because at the end

of it here here in a year you have either a newer nine thousand dollar or newer quote-unquote newer to you nine thousand dollar car and a paid-off car in 12 months or what jade said you're out of debt that much faster and in 12 months you have two newer car two cars again that are new to you but you're out of debt faster so it's kind of like do i want to be out of debt faster or do i want to be saving for a car faster but in a year you get to the same point hopefully still having two cars that's right and no debt but which avenue do you want to take it is interesting math it kind of is one of those, is it a coincidence or is it not? And it's about like what you value, like a little bit of what you're valuing in the moment. How old are your kids? Five and two. Five and two. Yeah. I mean, listen, when you have the option,

it's good. Like whoever's driving the kids around most might be like, I'm fine with paying off this car that I have because it's a nice car and it does what I want to do. And I'm fine paying that car off in the next six months or however long it's going to take as opposed to the plan that I laid out. So you and your wife have some things to talk about. Right, right. And we what's funny is we have talked about all these scenarios we're just trying to find a oh you wanted us to say you need to do this one

i do the one that i laid out but i'm not saying it's right i'm just saying jade would do that i would probably lean towards paying off the second i just i wouldn't want to just i wouldn't want to be stuck with these two cars and it take a year 14 months to just be paying off a car i would do one drastic move if it were me so i would probably pay off that second car get 9 000 get another car for that and then work my butt off and pay off that first car the 29 000 because what kind of car is it uh the 29 000 uh-huh i'm just curious uh it's a toy to camry okay okay um i just have a hard time with 30 000 for a camry i don't know why i do i'm like uh let's get something else some dumb decisions uh led to being upside down in the camry okay so i see i like rachel you know what now that i'm

thinking about it i do like rachel's option because you get one car paid off basically as soon as you can sell it which is great and you get it replaced with a cash car and then the other one yeah you can save up and we're clear difference and yeah because you guys make great money you make 150 so you can you know again you're not you're not crazy outside the bounds of the car loan even if you wanted to keep both tate i mean not to keep muddying the water for you again from the mathematical standpoint you guys could just work hard and pay these two cars off but but what jade and i are saying is that amount of sacrifice for a car is not worth it for me i would cut i would cut that time in

half because i don't want to sacrifice my life that long for a car so i'm going to drop one of them pay the other one off yeah and keep going not for a camry i can't sacrifice for a car. So I'm going to drop one of them, pay the other one off. Yeah. And keep going. Not for a Camry. I can't sacrifice for a Camry. I could sacrifice for like a Tahoe or like even a Jeep Wrangler, Rachel. There you go. Oh, I don't know if we helped you, Tate. We may have confused you even more, but that's, um, yeah, again, you're not going to go wrong. You're doing the plan. You're doing it well. And the point here is that you're actually working a plan, Tate. And you're going to look up in 12 months. Your life is going to look different.

It's just a matter of how fast you want to do it. So, yeah, I think getting one of them off the plate just feels like a, whew, okay, we're making it. Because you know how hard you've worked to pay off that first $21,000 that you guys have already paid off, right? I mean, it takes a lot of intentionality, a lot of work just to do that. And the question is, do you want that again for a car? Listen, I'm of the mind of anybody listening. If you're in debt and you have a car worth $20,000 or more and you can sell it and you're not upside down and if you could possibly

make a profit, I'm taking that deal just about every time because it's easy money to get back, and $20,000 is a lot of money. Sometimes we think, oh, it's just a car. It's $20,000. I'm like, no, if you have $60,000 of debt, you sell off a $20,000 car. Now you're only in $40,000.

I'm taking that bet every single time. It's not a bet. It's a deal. I'm taking that deal every single time. Yeah, because that is the, if there is a silver lining when it comes to the car debt if you're not upside down is there is an asset to sell right like with credit card debt yeah you can look around and see the crap that you bought that maybe you can try to sell but sometimes you paid for an experience

that you can't sell that right a vacation or something um so that is when you have those assets that you're able to offload to get you further in this process. It is. And it is amazing to me, Jade, the amount of people we talk to who have done this. They've sold the car. They've done the sacrifice. One of the comments that we hear a lot is like, we just didn't realize that we didn't need all this stuff to begin with. Right.

That's right. When you don't live, when you live without it and actually know that you can have an incredible relationships in your life, you can have all these other parts of your life that are great without all the crap you realize, oh my gosh, I'm just fine. We can do this. We can do this. So we are cheering you on Tate. You've got this. You've got this. Well, thanks to all the guys in the booth making this show happen. Jade, thank you always being a great host with me. And thank you, America. We'll be back. 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 Jade Warshaw, and we are answering your questions. So give us

a call at 888-825-5225. Again, it can be about your money, it can be about your career, your relationships, your life and we are here to help you sort out the problems, the thoughts that you have and hopefully get you to a good conclusion. So starting us off is Danielle in Hartford, Connecticut. Hey, Danielle, welcome to the show. Hi, Rachel. Hi, Jade. I first have to say I'm so incredibly thankful for the opportunity to speak to my dream team. So thank you for taking my call. Are we your dream team, Danielle? I love that. We love you. You're sweet. That's the end of this call. I'm so glad. I'm so glad. How can we help? Yes, we took some notes just so I don't forget to kind of paint the full picture,

but here's the situation. So my husband and I are currently on baby steps four, five, and six, and we agreed that you both would be the voice or reason for our current dilemma. Okay. So there is a home in our neighborhood about six doors down that the sellers approached us about. They knew that we were looking to potentially move and get a bigger home. And we love our neighborhood. So it kind of all worked out. This is about six months ago that they approached us. And when they approached us, we stopped throwing money at our current mortgage and started stashing away cash.

So we have about $100,000 in savings right now. So I'll give you. Oh, sorry. go ahead. Nope. Just saying good job. Oh, thank you. So I'll give you the numbers in a moment, but our question is, is this transaction Dave approved? And if so, what's the best way about going about it? So our current home is worth about $450,000 and we have about 110 left on our mortgage at 2% interest rate. We're looking to purchase the new home for $650,000 with, of course, today's interest rate. The caveat is that the sellers are looking to close by May 1 and then they want to remain in the home for 60 days thereafter. So we would obviously have to stay in our current residence prior to moving and we

couldn't sell our home and then roll that equity into a down payment like we originally had hoped, putting us in a similar position as we currently are and allowing us to kind of pay off our mortgage in about a year or so. So you'd have to carry two mortgages at once to make this deal work? Correct. My answer is no. Your answer is no your answer is no based on based on that alone like i don't i wouldn't even need to hear any more numbers even if you could easily afford this next house blah blah blah because they have to close may 1 and because your deal has to be contingent on the sale of your house and that's not i mean you could put your house on the market and see if it closes by May 1, and if it does, now we can talk, but there's no way I would carry two mortgages.

Okay, and that's my concern because we're so close to being done with our current mortgage that I just don't want us to be in a position where we're- Well, my question is, Danielle, you said you have $100,000 saved, correct? We do, yes. Okay, and you have $110,000 left on your home, correct? Correct. So part of me is like, just pay off your house. Loving it. So that's been my feeling. And I've just been very torn because the home is a little bit bigger. It's a nicer property. There's a pool. On the second home. On the second home.

But we're still looking to cash flow our kids' colleges and retire with dignity. So that's why I'm calling. So now the question is, is it better to have a home that's a little bit smaller, that's completely paid for and it's yours, or is it better to upgrade and possibly have a little bit more of a mortgage again. Correct. How much do you guys make a year? About $500. Okay, so if I'm getting this math correct, Danielle, if I was in your shoes.

So we're in February right now. You got March, April, May. You got three months. Plus, they are needing to stay in the house another two months. Is that right? Really two months you've got. Because you've got all of March, all of April. But they've got to close May 1st. That's true. March, April april may and then they're going to be in the house june and july correct correct so you have five months okay so what i would do danielle i

would pay off your house like i would take that money i would pay it off and then you have five months to just continue to save and have some money stashed away and then when you go to move in move in and that means the equity ideally you would sell your house at 450 for what it's uh i mean what yeah what could you sell your house for about 450. Yeah. So then you have a $200,000 mortgage making $500,000. I mean, listen, it sounds good, but it is hard to go from no home payment to no mortgage to mortgage. Yeah, but a $200,000 making $500,000, you're going to have it paid off in a year. If you guys lived on $300,000, you have your house paid off in a year. Yes, you have your house paid off in a year. Yes, you have your house paid off in a year.

The steps in doing it, I'm worried about carrying the two mortgages, but it sounds like you're You wouldn't have to. Yeah, I would pay it off. Got it. Okay. Yep. But again, and what Jade said earlier is a really valid, valid point, though, is to have this discussion of like, what do we want, right?

Because I can tell you, you know, my my in-laws they actually upgraded house when they were empty nesters um and they live on lands now they have a bigger home so when we all go in you know it's wonderful and they love it they love it and so you know they did the opposite of downsizing like some people do and it worked for them that's what they valued and that's great right where other people are like, Oh, no, I don't want this much work for a house. I'm going to go down. And that's what they value, right? So as long as the numbers work, which in this plan, they would, I wouldn't want to carry two mortgages, I would go ahead and just pay off your house. And then sell it. And then, yeah, you'll have golly. Oh, I mean, yeah, throw all that at the house. Yeah. And then you have two hundred thousand

dollars that you owe at that point so let's go back and clarify one little piece because you said she said the neighbors have to close by may 1st right so even if you pay even if you pay off your house let's say you pay your house off and you decide yeah i do want to get the house that six stores down she'd still have to sell within before closing period in order to get, even if she bought her current house outright, you'd still have to close on that to get the cash to buy the next house.

So I still don't want you to think, hey, this house is paid for. We can still do this deal and take the mortgage on the other one, even though you have a house that's paid off does that make sense yeah yeah yeah like either way you still got me nervous whether you pay off the house or not you've still got to sell it and close and get that money before you make the next house and then what do we do between may and that 60 days where they remain

in there i guess we would have to have the same contingency in our sale. Yes. Yeah. The dominoes would have to fall pretty perfectly. Yeah. And that's one lender mentioned a HELOC. And I was even worried. That's what I'm saying.

I don't want you to feel desperate about this. Yes. Like you're in a great situation and I don't want your want to get this house to cause desperation and to cause that to make you to make a bad decision when you're in such a great financial situation. Yeah. I appreciate that very much. Yeah. Oh, Danielle.

Thanks for the advice. Yes. I'm so glad that you called. I know if the dominoes fell perfectly, it's a beautiful story. It's like, oh, gosh, we get what we've wanted. And, you know, we're not in a crazy financial situation in that point. We can still, you know, pay it off. Yeah yeah but the dominoes have to fall really well the average days on market right now is what might make or break this yes that's fair that's totally fair so great well thanks for the call danielle this is the ramsey show

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That's betterhelp.com slash deloney. The Ramsey Show question of the day is sponsored by Neighborly, your hub for home services. Take your home's efficiency and style to the next level with convenient solutions from Shelf Genie, Window Genie, and Glass Doctor. Visit neighborly.com slash Ramsey to schedule your home service professionals near you. Love this. All right. Today's question comes from Rob in South Carolina. He says, you often warn listeners to beware of lifestyle creep. I totally get that as a concept, but I think I may have the opposite problem.

We are doing well and our baby steps multi-millionaires very good but we could have better options for our future if we cut back even more on our expenses or maybe i feel that way because for many years i spent way beyond my means and was a totally just totally stupid with our money and i'm afraid i will relapse. How can I get over this mental block and start enjoying our success? Wow. I love this. Listen, I think I can relate to this a little bit. You know, when you've kind of screwed up with your money and you've had to go back and fix

all these mistakes and you feel like you've lost time and now you've done all of that work, you're on the flip side. It can be hard to turn that switch off and say, okay, let's enjoy some of the fruit of our labor and let's enjoy the lifestyle that we've created because of our smart behavior. And there's part of this here where I do feel like you need to trust yourself and trust that you've changed your behavior and that you've become a different person and live your life in a state of confidence as opposed to in a state of fear because I think if you're doing all of these financial choices as with fear as your driver and fear as your motivator and kind of like penance as the the driver I think that it

turns something that's supposed to be really beautiful and really great into something that's kind of negative and I don't deserve it. And, you know, and it kind of sucks the joy right out of it. And the whole purpose of doing this is the later. It's the so that and there's joy on the other side of that. And I really want you to experience that in the right measure. What would you say, Rachel? Yeah, well, you know, with money, we always talk about giving, saving and spending. And you want to do all three for a reason. Number one, generosity. I mean, it brings joy to your life unlike anything else. And that's why we always say live like no one else. Later, you can live and give like no one else. So that giving is so crucial. I think saving is so crucial so that you have a future so that you do have that security

and you're being wise. You're changing your family tree. There's a legacy that's changing a mindset with delayed gratification, and that's important. And honestly, Jade, I think the spending aspect is not just to enjoy your life, but it also is so that money doesn't have this handle on you, this hold on you. There is something about opening your hand.

Generosity can be that visual as well, but also letting some money go because you can almost become this hoarder and there's a level of unhealthy control in that extreme that is just as damaging as someone that just goes and spends everything. And so and what I think is so important is keeping money at its proper place. And I think in our world today, it becomes something that we put our identity in.

We put our worth in. It's become so elevated, almost like a god that we worship so much. And when that's the case, that's an unhealthy view of money. Money should be down below. It's a tool to create a life that you love. That's what it's there for. It's not a thing to worship or to run after. It is to create peace in your life, give you margin, and be able to help people. And so in order to do that, I think that some savers to an extreme can hold, it can be held up here. It can be this level of I'm putting it in an improper place. So I think spending, you have to build another muscle that actually gives you some freedom in a weird way.

I'm saying this as a spender. I agree with what you're saying. Yeah. There is something there that is so powerful. And so from a tactical sense, we talked to a lot of people, Rob, that have the same situation. A lot of people that have gotten out of debt, you know, and you even said that you felt this even in your journey. Gotta switch the off button. Yeah, and so, you know, create a budget

and, you know, a little bit at a time, month after month, up just a little bit. You don't have to go extreme, but practice spending. I mean, practice forcing yourself to go out to a great dinner. Yes. And go and spend some money and go have a great dinner. Get two appetizers. Like go and enjoy. Right. You can start small. Yeah. And you'll start to see, OK, I can. Again, it doesn't have a hold on me. And it's fear. It's not lifestyle creep. Here's here's the way that I define lifestyle

creep even in my own life. And Rachel, you speak into this. Yeah. If you're's the way that I define lifestyle creep even in my own life and Rachel you speak into this too if you're doing the things that make you a financially responsible adult right you've paid off your debt you're budgeting every single month you're carrying the proper insurances you're investing for your future and like Rachel said you're practicing generosity and you're challenging yourself on generosity if you're doing all of those things and you still have money left over to increase your lifestyle it's not lifestyle creep it's just you're doing good like you're doing all of those things and you still have money left over to increase your lifestyle it's not lifestyle creep it's just that's right you're doing good like you're just doing well and there's nothing bad about that and you should be able to increase and creep up your lifestyle

if you're increasingly doing well and you're doing those what i call five pillars of financial you know personal finance yeah that's kind of the if if you're doing right, then you get to do right. Like you get to do more. So that's. So good. Hope that helps you, Rob. So great. All right, let's go to the phones. And we have Devin in San Antonio. Hi, Devin. Welcome to the show. Hey, thank you for taking the call. Absolutely. How can we help? My question is, should I stop putting into my retirement fund for the next year or two to completely get us paid off all our debt?

How much debt do you guys have left? So we have $43,000. Okay. Is it consumer debt or mortgage debt? Consumer debt. We still, we have mortgage debt, but we are actually in the process of downsizing our house as well. Okay, great. How much do you guys make a year? So we make around 110,000. Okay. And if you stopped contributing, how much have you calculated how much you will have back in your paycheck? Yes. So depending on my overtime due to being working as a firefighter, it could be around $700,000 to $1,000 a month. Wow. Nice. Amazing. Well, Devin, yeah, I mean, that's exactly what I would do. I mean, honestly, regardless of the numbers, I was just more curious to see how quickly that gets you out of debt. consumer debt pausing retirements when we're saying pausing you guys because you'll press play later don't worry but you pause retirement because any extra income you can have in your paycheck and again that includes pausing retirement if you got a huge tax refund this year go and

change your exemptions to get some cash back in your paycheck that's over time that's cutting expenses whatever it is to have more margin to throw out the debt is what we are focused on it's the number one thing and so investing is part of that which it freaks a lot of people out jay when they hear the math and they're like oh my gosh but my 401k that's free money they're going to match it but there's something about this focus intensity that in getting out of debt that much faster that then you're going to up your retirement savings to 15% of your income, which a lot of people don't even do that. They're doing the match. Yes. Yes. Yeah. So a lot of people they're, they're doing four or 5% of their income. So you're going to be able to definitely catch up and be fine financially. Um, even if you pause for a year, which is what we

would recommend. Okay. Perfect. That, cause that was my biggest thing. My wife was 100% due and I was just a little hesitant to do it just yet. What causes you to be hesitant? Because my biggest thing was okay to catching up and she was telling me that, hey, in the end, you're going to be putting that extra in and you'll catch up within a year or two. Yep. Yep. That's exactly right. Yeah. And that's a lot of people's, you know, fear. And the great thing is, Devin, I mean, it's one year. How old are you guys? We're 30. Oh, yeah. You got plenty of time, Devin. You're good. I'm on your wife's team on this one. I am too. And, you know, it's kind of funny. You have to you have to look at it. You almost have to be fair, intellectually fair,

if you will, because a lot of people are nervous to stop contributions because they're like I don't want to miss out on this money I don't want to miss out on this money but I'm like as long as you're making debt payments you're missing out on all of that money that you're putting in payments every month like we have to think about it in both settings you're either missing out on money in the form of car payments and student loan payments. And for most people, that's thousands of dollars every month. And we're worried about, you know, the three percent match and, you know, the two hundred dollars over there. So it's kind of like we've got to align on both sides of the equation. And I mean, the truth is,

when you start investing, I'm really proud of people for wanting to invest in being forward thinking in that way. But if you do it before you're out of debt and before you have the right amount of savings, your investment, retirement investment becomes your emergency fund and people dip into that and have to pay the taxes and fees because of it. And they form bad habits because of it. So there's a way to do this in order so that it's actually retirement savings and that you can enjoy it at the right point. So good. Well, thanks, Devin, for the call.

Hope that helps. This is The Ramsey Show. Welcome back to The Ramsey Show. I am Rachel Cruz hosting this hour with Jade Warshaw. We're taking your calls at 888-825-5225. Up next, we have Sharon in Springfield. Hi, Sharon. Welcome to the show. Hi.

Thanks so much for having me today. Absolutely. How can we help? Well, my husband's been handling our finances for the last, we've been married almost 20 years, and to the point that I really don't know what's going on in our finances, largely. I say in a lot of ways, he controls a lot of what we spend and how we spend it. And, you know, we'll have financial discussions and we'll talk about it, but I don't really have a full understanding of our financial picture when we make decisions. Okay. And I can't get him to

sit down and make a budget. Now we've been through the Ramsey programs. I think we've been through them twice. We've even been out of consumer debt in the past, but keeping a consistent budget is a problem. I am the breadwinner in the family. And I'm wondering if it's worth just pulling my money out of our joint account and keeping my money separate so that I can at least budget part of what our income is. Why won't he budget? Like when you say, hey, I want to sit down and do this, what's his reason? Is it he doesn't have time? He doesn't think it's like, what's his problem? I think a lot of it is just understanding like how to plan for little things that come up with

the kids like costumes that the kids need for programs or you know posters that they need to you know for school presentations you know making sure we've got money for those little things and of course there's more than just what the kids. And he doesn't want to do that or you want to do that. And he doesn't think that's necessary to plan for those details. He's hesitant about the zero, like getting all of the money and giving it a name. I hear that a lot. Take all the money, give all the money a name and, you know, like that zero budget. But it doesn't mean zero dollars in the account. Maybe that's what's

making him nervous. I'm sorry, say that again. So zero based budget doesn't mean zero dollars in the account. And that might be really clear, like really important to make clear to him. Zero based budget simply means. we've talked about that. Okay, so he knows that. So at the beginning of this call, Sharon, you mentioned that he is more the one that's controlling all the finances. What does that mean?

Does that mean do you have a debit card to your account that you share with him and you go and buy the costumes for the kids? Or how is the money flow happening right now? I do have a debit card. I spend very little of the money out of the account without at least clearing it with him first because I'm so blind to what's there. Why? Why do you feel the need to ask his permission? Because I don't, because we don't have a budget. So I don't know what money is there and how to use it. Okay, let's get down to it because our screen says,

my husband has been withholding money, has been withholding finances from me for our entire marriage. And that sounds different than what you're saying. So help us understand. Well, yeah, he does withhold all of the information about the account. Yes. So you don't want to, you ask permission to spend because you have no idea what money's in there. So it's just you don't want to blindly spend with the debit card. Can you not log into the... Do you have the login information, Sharon? I don't currently have the login information.

Have you asked it for him? And what does he say? I have asked him for it and I have tried to look at it not here recently but I have tried to look at it and I'm so overwhelmed like I don't even know where to start so he gave it to you or he didn't give it to you um I he didn't he logged in himself he logged in himself and let you look over his shoulder. Oh, Sharon, that makes me nervous. Yeah, I think at this point, I would be okay with you having your own account. But hear me say, Sharon, that this, it's going to fix one part of it,

that you're going to have money to be able to spend, but it's not going to fix your marriage. This is a temporary solution to really dive into the deeper parts. Because Sharon, what makes me nervous is, and we've seen situations like this, that if you don't know where the money's going, I would be very highly concerned

that there's stuff going on in other parts of your marriage That you have no clue about Yeah, you don't know what he's hiding Do you feel that? Yes In some ways, yes Okay

Yeah, I would start laying down an ultimatum with him And again, this is And for anyone listening right now this is regardless of Sharon is the breadwinner or not okay so her making the money great but even if Sharon was a stay-at-home mom my viewpoint would be the exact same um because as a married couple as as you guys you are a team working together and he has control issues and sometimes Sharon and I'm going to just say this and you can correct me in here but sometimes it puts you in a dangerous situation with a lot of abusive husbands they use a level of power and control that you can't even go to the grocery

store and has there been abuse in your in your marriage in the past 20 years? Physical views? No. Never. Do you feel in danger? Do you feel like there's danger in your home? No. I feel like my husband is very insecure and so he's trying to keep hold

of the money so that I can't leave. I know that sounds terrible. No, it doesn't. No, that's the truth. That's very real. That's what's going on. Yeah.

Do you guys have kids? We do. We've got two kids. How old are they? Almost 9 and 13. They're both about to have birthdays. Okay. Yeah, I would have an ultimatum conversation,

and it is you're going to give me all this login information. Yeah. And I want to see everything that's been going on, any bills. Do you know how many credit cards he has? I believe we've just got one active credit card. I would ask him to pull his credit report. And pull yours. I want to see both of your credit reports.

I want the login information to all of our accounts, including retirement, including checking, including savings. Any of those accounts, I want the login information and I want them tonight. I want them tonight. Because if not, tomorrow morning, I'm going to be at the bank at 9 a.m and i'm opening up my own account because sharon he has put you and he has done this you're not the crazy one he has put you in this situation so you're not being the bad guy here you're protecting yourself so important and if you ask him hey because of the state of our marriage, we're going to go to counseling.

What would he say to that? If you said enough is enough. We need to talk with someone. What would he go or would he fight that? He would tell me we couldn't afford it. OK, so how much do you make a year, Sharon? How much are you bringing in? I know what my salary is. I'm like 105. Okay. I don't know what my actual take home would be. He's handled our taxes. What does he bring home?

I don't know exactly. I think it's around 60. Okay. Yeah, those are the two ultimatums. Counseling and he's changing by morning. Or like rachel said you're going on an opening an account and i just want you to know like you're doing well like for yourself you're doing well and you don't have to stay in a situation where someone is abusing you financially. And I'm just going to put it at that.

That's hard to hear. That's hard to hear. Yeah, I know. Yeah, Sharon, we want what we see so much is money issues are the symptom of a lot of things going on. And so the issue of you not knowing numbers and not having the accessibility to see what's going on financially in your home is a symptom of having a controlling husband. And there's only so much you can do. You can't change him.

But what you can do is protect yourself. And if you stay on the line, Christian's going to pick up. And I want to get you with one of our certified counselors. It's just spending seven minutes with you on a radio call. I feel like it doesn't do it justice. I want someone walking with you, Sharon, in this. Because this is really important. This is really important.

And I pray your marriage is healed in this process. It's going to be a really hard patch. But I pray redemption marriage is healed in this process. It's going to be a really hard patch, but I pray redemption of that. I really do. I pray that you both come to the other side and are redeemed in this, but if not, I want you to protect yourself. This is The Ramsey Show. Jade, I want to just go back a little bit to the conversation we were having last segment about a wife and she didn't have the knowledge of what was going on financially because her husband was was keeping it from her and we advise that she needs her own account there needs to be some separation because there's a level of

of abuse there financially when you have to ask permission for everything and and that's and and that those situations are on the fewer end of the spectrum than majority of couples we talk to on the show about joint accounts. Because we are promoters of having joint checking accounts. We think that that is one of the best ways to work together as a couple as you're working this plan, whether you're getting out of debt or seeing yourself as a united team. So majority of time, jade we get calls that that they're in separate accounts and they're like okay do we do we combine them do we not and so for majority of of couples out there joint accounts is one of the best things that you can do for your marriage when you see yourself as a team and you work together both sit down yes husband

and wife sit down and do a budget together. Both have equal say in what's going on with the money. You know, both show mutual respect in that. And we are locking arms and we're doing this life together. We are married. We share a bed. We share kids. We're sharing our money.

We're sharing our life. When we get married, we are sharing our life. And that is really our stance in this. But we always have an asterisk yeah i mean you've got to be in a safe and healthy relationship for that to take place and the fact is some people are not in a safe and healthy relationship and it can have been that way so long that they don't realize that it's no longer safe and it's no longer healthy which is what we saw you know, with the previous caller. And so there is something to be said for evaluating your situation. And it's not an excuse for like,

I had posted about this a while back, Rachel, and somebody said, oh, well, my husband goes to Target and just spends without telling me. So my relationship is no longer safe. And I'm like, you have to be able to read between the lines and understand what we mean by that right right and so i um when i wrote the book money's not a math problem i came up with an acronym for that for keeping your money safe s-a-f-e and i kind of say the s is you need to seek counsel if you are experiencing the a which is addiction of any kind so if it's gambling it's pornography something that's keeping them spending spending spending if there's any kind. So if it's gambling, it's pornography, something that's keeping them spending, spending, spending. If there's any kind of abuse, and as we saw in the last caller, a lot of people hear the word abuse and they think, okay, this guy's slapping me around or maybe they're talking down to me or calling me names. But a lot of times it's that

financial abuse like we saw there. They're not letting you in. They're not giving you the passwords. They're giving you an allowance and you can only go to the grocery store and buy this yes and that is a form of abuse and when that happens you've got to seek counsel and then the e is for evaluate your options and your options are like what rachel said you can form another account and you can separate yourself uh for the time being and if that person is unwilling to seek counsel with you you've got to evaluate and say, what do I need to do next? Are there children in this situation?

Do I need to make some hard lines in the sand? And I just don't stand for abuse of any kind. So I have a really hard time telling anybody to wait that out. I'm like, I separate myself from that. You can always find inroads to get back. But if a person is unwilling to seek counsel on your marriage and

your money, that's a hard line in the sand and it's hard. It's a hard thing to swallow. Yeah. And to say it. Yes. And to say that. Right. But but that's the truth of it, you guys. So as as as married couples out there, again, we are so pro working together as a team. But when one person in the situation is not working as a team and in that it's abuse addiction, there are things there that put you in danger. That is when you have to protect yourself. And and I'll say this, too. We talk to, you know, people on all different, you know, income levels, all different parts of the country, all different viewpoints on marriage and roles and

a spirituality. I mean, like you can get into all these nitty gritty stuff. But ladies out there, if you are a stay at home mom, you have just as much say at what is going on with the money in your home. Don't just yield that he's going to just take care of everything. And so much more of this is less about, you know, man or woman, but personality. Because also, again, not to drag on this conversation, but I think it's important. One of you is going to be more excited to do the budget. One of you is going to be the one that's more of the nerd, we call it, that they want to be, oh my gosh, we can't wait for this. And the other free spirit.

And sometimes the free spirits, we talk to the nerds and they're like, well, my wife never wants to do anything. And I'm like, well, listen, is she participating in it? Right. Is she, you know, part of the conversation? Like that's the goal here. One of you may not love it as much as the other, but that's not what we're talking about. But it's the idea that regardless of who you are in the marriage, you have equal say and equal access and equal access to your money. You guys, it's really, really crucial because that promotes

health and that promotes openness and promotes communication, which is going to help in other parts of your life and your marriage, not just money. So we want to create these good habits, you guys, and money's an avenue in that. Let's go to the phones. We have Helen in Las Vegas. Hey, Helen, welcome to the show. Hi, thanks for taking my call. And my question is simply this. I was ill these last four years and I had to use my credit cards and 401ks and all that to survive during that time. I'm sorry. What was going on? Oh, well, I still have issues. It's a cancer stage. I'm sorry. I'm so sorry. But anyway, I did get a settlement recently, and my credit cards are about $60,000. And I'm just wondering, my question is, should I just pay them off and get rid of them?

I did look up to see if I could get some debt relief program or something like that. But it sort of looked to me like you have to pay them. And I don't know. And I don't want to quit paying the credit cards and getting a well, they do give you like I guess they give you some kind of help if you if you quit paying them. But I don't want to do that either. So I was wondering if I should try to take that money and try to make money, or should I just pay off those credit cards and just get the relief of not having to make those minimum payments on about 10 credit cards every month? Yeah. How much was your medical settlement? How much did you get?

About $170. Okay. Do you have any other money saved? I used it all up. Okay, so you cashed off retirement, everything, so there's nothing. I had to, yeah. Is the credit card the only debt you have? Well, I mean, I have my house, and that's one of the reasons why I didn't expect not to be working.

So that mortgage is $1,800. And what do you owe on the house as well? Oh, a lot. All of it, really. How much is that? $400,000. $400,000, okay. And are you working at all, no okay no how old are you uh 71 okay okay so what are you living besides the settlement money what are you living off of

and what's kind of your monthly are you taking 4500 okay social security um i would take some of this money and i would pay off the credit cards and i would take some of this money and i would keep three to six months of expenses for you maybe six months because you're living alone and you've got this health condition um and then i would take the rest of it and I would pay off the, I would start paying off the mortgage. I'm just walking down the baby steps with you is basically what I'm doing. And so I'd love if you got to a point, you know, you've got 4,500, do you have any other money in retirement or any other investment accounts?

No, no. I, uh, like I said, I had to use it all. Yeah. And this, this house, Helen, Helen um is it size wise location wise I'm just wondering um at your age yeah if you're able to um find another option for a living maybe to reduce not just the mortgage payment but just the mortgage overall if you can if you can get to a place A smaller living situation That would relieve Not just the $1,800 payments

But also relieve just the total mortgage That you're going to have Well with the cost of rents And everything here It's just I'd be looking at another rent Of $1,800 somewhere It's high

So it makes no difference That I live here Live out my life here now the rent of $1,800 somewhere. Right, right. It's high. So it makes no difference that I live here, live out my life here now, you know, because of that price now. Yeah, I hear you. But that's my main concern was just, you know, letting go of $60,000, boom, bam, boom. If that was okay, if that's the right thing. Yeah, I think it is, Helen. That's what i would do and then and then um be working to yeah get that emergency fund and then putting the rest yeah towards that down payment or i'm sorry towards towards the mortgage mortgage get

it paid off as quickly as possible yep thank you for calling thanks to all guys all the guys in the booth thank you america thank you jade this is The Ramsey Show. 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 Jade Warshaw, and we are taking your calls at 888-825-5225. Well, Jade, we're gonna do something fun. Something a little different this segment and next we're gonna start a segment called Pick a Side and Pick a Side segment means that we're gonna talk to a couple. We have Mark and Samantha on the line and they are kind of in a disagreement of what to do about a situation and so they're each going to have time to lay out their case present it to us

jade the referees and then you and i are going to decide next segment who's right whose side do we think yeah i got my pen and paper ready. We cannot wait. Okay, so to start us off here with the Pick A Side segment, we have Mark and Samantha from Harrisburg, Pennsylvania. Hey, Mark and Samantha, thanks for joining us. Good afternoon, ladies. How are you? We're doing great.

We are so excited about this. I'm so glad you're both here because we can really get the story. Yeah, we're still in negotiations. We just need an impartial third party to kind of lean us in one way or the other. I love it so much. Okay, let's hear it. Who wants to go first? Well, I'll lay everything out for us. So here's the situation. My wife and I recently built a new home. So we've been in it for a couple months now. And we're starting to receive estimates to build a patio in our backyard, you know, stone, nice pagoda, things of that nature. Yeah. Now, we received the estimate of $50,000. We have a CD that's due to mature in July and it should be roughly about

twenty seven thousand dollars. Now, currently, we pay an additional thousand dollars on the principal for our mortgage every month. So we're wondering, do we take that extra principal payment and save for roughly 18 to 20 months, use that CD to pay cash for the patio? Or do we use that CD, put that on the mortgage to pay the mortgage off faster? Okay. How much do you guys have left on the mortgage? We have $109,000. $109,000 left on the mortgage. And how much do you guys make a year? Roughly $70,000. $70,000 left on the mortgage. And how much do you guys make a year? Roughly $70,000.

$70,000. Okay. How much did you say the extra mortgage payment was that you're making every month? We're making, on the principle, $1,000. Okay, $1,000 extra every month. Okay. And any other debt? Nope.

We're on four, five, and six. Okay. That's great. All right. So who wants to do the patio? Who doesn't? Oh, I want five, and six. Okay. That's great. All right. So who wants to do the patio? Who doesn't? Oh, I want to do the patio. Okay.

Mainly my reason behind it is we recently lost a couple of friends here recently that are our age and don't want to put off for tomorrow and not enjoy today. So, you know, since I'm not willing to go into debt for this, that's an absolute no, no, no, that's a dirty four letter word in our house. You know, we, you know, can cash flow it, you know, save, you know, roughly about two years, cash flow it and enjoy the time we have with friends and family entertaining because that's what we built the house for us to entertain everyone. And it sounds like you saved a lot of money for it, because you said it's a new build. You've only been in it for a couple of months, but you only owe $109,000 on it? Well, there's a little caveat to that. Actually, my wife and I lost our house in a fire, so we were able to rebuild the house without taking out any additional debt and keep

the same mortgage, which we have. Oh, wow. Wow, that's something. And did you say, Mark, you're going to save for two years in order to pay for the patio or would you use the CD when it comes to maturity? Well, it would be save for the two years plus with the added CD, we should be able to cash flow it. Okay. How much is the patio?

Roughly about 50. 50,000. Okay. For the patio. Oh, I'm sorry. And the CD is the 27,000, okay, for the patio. Oh, I'm sorry, and the CD is the $27,000. $27,000. Oh, okay, I'm sorry. My notes, I had them flipped.

So it'd take you roughly a year to get the patio and two years to pay off the mortgage? No, it'd take us about two years. Well, yeah, roughly. My calculation is using your guys' payoff calendar. If we just put the CD on the mortgage as well as our extra payment, it would be paid for roughly in September of 27, so a little bit longer than that. Okay, September of 27.

Roughly about three years. Okay, so Samantha, we've heard from Mark and his scenario. So what makes you, Samantha, not want to do the patio and just want to go ahead and pay off the mortgage? Well, I keep reminding him how Dr. John says how good your body feels once you have no debt. And I keep telling him, think how much we will enjoy this patio once we truly own this house. It's clear and free. Then we can sit outside and enjoy it.

So that's basically my angle. I don't want to have any debt. And, you know, I think both scenarios are good, but I really, really want to pay off the mortgage, not dissuade you ladies anyway. Can I ask a question? Since you guys have paid off your debt and saved up your money tell me something fun that you've done as a result of basically being in baby step six we just got back from a cruise about two weeks ago that we cash flowed okay so you feel like you feel like you guys are living you're taking regular vacations. Is that fair? Yes. Okay. You both agree with that. So it's not like we're stifling ourselves, right? No, we're working our butts off, but no, we're not struggling by any means. Also having fun. Okay. Okay. I'll take that into my notes, into my consideration. Yes. Okay okay one more clarifying question if you

threw everything at the mortgage you'd have it paid off you said mark in about two and a half years ish about three three years three three and a half years okay three years yeah but then two years for the patio correct okay so in a you know in just a perfect world in five and a half years you could both are going to happen it's just a matter of which one goes first correct correct okay that's great interesting okay um another question about the patio is it in phases is there some part of it that you can have now and save another part for later like does that make sense my only reserve yeah my only reservation with that is that it's always going to get more expensive so that 50,000 then turns in 55 into 60,000 if we wait but yes it could but i don't think the original estimate will remain the same

oh you're saying just because of inflation and price of goods and just things going on over time. And labor, things of that nature. It will get more expensive. I'm almost guaranteed of that. As it goes, yeah. And what does the patio include? Be clear.

Is it like outdoor kitchen and fireplace? Tell me more about it. Yeah, so it's a bunch of stonework, some raised planters. We're going to pipe a propane line in for a nice seated area with a propane fire pit. Okay. As well as a pergola. So we have a nice seated area to eat. And once again, just a nice outdoor entertainment.

What is it right now? Not the whole. What is it right now? It is grass and gravel. Grass and gravel. All right. All right. I've got enough to take my notes.

Okay. Okay. Mark and Samantha, hold on the line. When you come back, we'll tell you what we think. I feel like we need a bailiff. Austin comes in and tells us what the verdict is. Oh, so good. Okay.

We'll be back. All right. good okay we'll be back all right we're back with pick a side and we had mark and samantha layouts two pretty um i'd say convincing cases one with mark who um wants to build a patio for fifty thousand dollars they have a cd that's going to mature next year so that and their savings they could cash flow it build it uh in two years and it'll be great samantha on the other hand wants to throw all that extra money pay off the mortgage it'll take about three and a half years to pay off the mortgage and she just said you know how much when you don't have debt there is a weight that is lifted off and there is such freedom such freedom when it comes to that. OK, was that was that a fair summary, you guys on both sides? Yeah, OK. Yep, absolutely.

OK, we both have one follow up. I have one final question. And Rachel does, too. So, Mark, this patio, realistically, because you guys live in Pennsylvania. Realistically, how many months out of the year do you think that you'll get realistic use out of this? We should get a good 7 to 8 Months a year out of it Really okay okay

Samantha my questions for you On a scale from 1 to 10 10 being I am obsessed With patios 1 being I hate being outside And I never will use it Where are you on the scale of the patio of your excitement and your use and

where you want to put $50,000? Well, if we pay $50,000, you definitely should believe I will be using it. Okay. Okay. No, but for real though,

do you, do you want it though? Like, do you, would you be excited about having it and hosting up there? Like, is that part of your value and dream? And like, oh my gosh, how great that would be?

Long term, yes. Long term, yes. Yeah. Okay, so you are excited. Okay, because I didn't want to make this decision. And then Samantha, you feel like, oh my gosh, we're spending all this money on something that I don't even care to use, right?

So yeah, so I wanted to make sure that you at least would be excited for the patio yeah okay all right um let's say our answer on the count of three what are we gonna say patio or mortgage okay ready yes count it down three two one patio patio oh were you were you surprised i'm surprised did we blow your mind well let's tell them why okay yeah i'll give yeah jade you give your reasons i'll give mine and samantha i just want to give you a hug right now i'm sorry we wouldn't get you i know i know my reason would just be because you guys have done such a great job. And we say all the time, you know, baby step four, five and six is really about intentionality. It's not about having to be intense. And I kind of what Mark said,

you know, you guys, you endured a fire, you've endured some loss. And I do think there is something to be said for making sure that you're enjoying the fruit of your labor. And I do think there is something to be said for making sure that you're enjoying the fruit of your labor. And I think that you guys would truly enjoy this. And at the end of the day, five years is going to pass. Both of these things are going to be done. It doesn't throw you off course. It doesn't take anything away. So that's my. Yep. For those reasons, I'm in. OK. Yep. And I would say, yeah, the timeline is really important. So if you guys said that you had, gosh, you know, 10 more years on either end, right? So much longer on it. Or you had six months, right?

Like, I mean, if it was both extremes, I think my answer would be changed. But the fact that it's okay, it's kind of this perfect medium to your point, Jade. It is about intentionality, not intensity. And here's my belief, too. I really think your income in the next five years is going to go up. And so I think you're going to be able to get that piece of paying off the mortgage faster than you even think as you stretch out this five year time frame. That's a good point.

And even now, like your ratio of income to how much is left on the mortgage is so yes like it's very healthy so yeah yep um so yeah y'all i would i would build a patio well yeah i'm i'm very surprised do your happy dance mark do your dance i'm happy but you know one i can see both sides of the coin as well too, that, you know, for as hard as we work, you know,

that could save us two years of the hard labor in order to pay the house off faster to have that, you know, the peace of mind for it. But I can also get a little bit of peace of mind while I'm kicked up, but enjoying a sunset. I know that's right. Mark,

you're a good man. You did not do the touchdown dance that I thought you were going to do. I know that's right mark you're a good man you did not do the touchdown dance that i thought you were gonna do i know that's funny so you both thought we would say get out of debt because i guess that's what we're known for right is that what you were thinking yes but i think that's really good that all of our hard work has gotten us to this point has led us to this fork in the road and it sounds like we can do either because of our hard work and because of our sacrifices. That's right. Our intentionality.

And you know, it's funny. I'm actually smiling. I can hear it. I can hear it in your voice. And you know, it's funny. Sometimes when you want something like Mark on his side, and then you actually like,

we kind of opened the door of like you can, then sometimes you kind of second guess. Do I really want it? Or was it more just this like kind of intensity of you know wanting something i can't have or feel like i can't i feel like this story is not over and mark and samantha let me add this note if there were other personalities sitting in this chair they

may have given you other answers that is a fact i think deloney would have said paid off the house deloney would have what do you think about george what would george probably would have said pay off the house they need to live a little those those guys. Ken would say build a patio. Yeah, Ken would say build a patio. But I think George and Deloney would say pay off the house. They would. So you may have called on the wrong day, Samantha. I'm so sorry. That's a good point. They may have to call back then. I know.

You should. You should. Do the exact same question and see what they say. That is awesome. You guys are troopers. Thanks so much. And y'all enjoy it. Take a picture and show it to us when it's done. I was going to say, yeah, tag us on social when it's done. And we want to see. We can do that.

So great. Thank you, guys. Yep. But I mean, you know, either way, you're not going to go wrong. No, they can't go wrong. That's so good. You're going to have a patio and a paid for house. It's just which one is first.

And again, you guys, when you get to that point of four, five, and six, that's when you replace the furniture. That's when you can replace the car. That's when you can do some renovations. You know, a lot of people go straight through there, Rachel. It's like they feel that momentum of paying off debt. Yeah. And it's not wrong.

We just don't want you to burn out, right? Because there is a part of living life. And Mark, I'll say this too. And Samantha, you can quote me on this. out right because there is a part of living life and and mark i'll say this too and samantha you can you can quote me on this don't go over budget because whenever you're doing stuff around the house jade it is the thing that just creeps it's like well this stone is great but if you get this stone it's just a little bit more but it's great and then the kitchen appliances i mean you can really get in the spiral where you go down real quick. That is true. And in two years time, you might find that there's more things that you want.

That's true. I know. I know. Just pay cash. Yep. Just pay cash with it. So, so great. Well, Mark and Samantha Trooper, so great.

So, so great. Well, you guys, we are excited that we're actually going to be having an event here in Nashville at the Ramsey Solutions headquarters up in our conference center, May 10th and 11th. And it's the Total Money Makeover weekend. And it is happening. We love events around here. We love hanging out with you guys and people travel from all over.

Yeah. And Nashville is such a great destination place. And so there are millions of people out there listening or watching right now. And maybe you're sitting on the sidelines. Maybe you're kind of like, gosh, I really want to jump in. Listen, this would be the event to really jumpstart you. This is the event to get the motivation. If you haven't started, maybe if you're in the middle of this process and you're like,

man, I just need like-minded people in a room. I need that extra motivation. This is for you. Maybe you're like man I I just need like-minded people in a room I need that extra motivation this is for you maybe you're on baby step seven and you're like we just want to fun weekends in Nashville and we're gonna hang out with the Ramsey personalities love that because we're all gonna be there uh for the weekend and so again we are really excited we're gonna you know have some some talks we want to be able to dialogue with you guys in the audience and John and I John Deloney and I did this with our money and marriage event which we loved is we did so some talks we want to be able to dialogue with you guys in the audience and john and i john deloney and i did this with our money and marriage event which we loved is we did so much q a because

hearing from people just like this show where it's color driven hearing from people and their stories and their situations is so helpful for other people to learn and so we're going to do a lot of that we want to we want to hang out with you guys and and hear what's going on in your life. So again, lots of Q&As there. So with the first 500 tickets sold, you're going to get a copy of the total money makeover signed by Dave. Nice. And those are going fast. And you can get your early bird tickets for just $99 for a limited time. So go to RamseySolutions.com slash events for that. So again, you guys, it's the Total Money Makeover live weekend here in Nashville, Tennessee at the Ramsey Solutions headquarters. And that's May 10th and 11th, May 10th. That night, George and I, George myself and Dave Ramsey, we're all going to be there hanging out with you guys.

So make sure to get your tickets again at ramseysolutions.com slash events. Welcome back to The Ramsey Show. I am Rachel Cruz hosting today with Jade Warshaw, and we are taking your calls. Up next, we have Sam in Dallas, Texas. Hi, Sam. Welcome to the show. Hey, thank you for taking my call. Absolutely.

How can we help? Yeah, my wife and I currently, I guess I personally have a 529 account that has $700,000 in it, and I'm currently out of school. Me and my wife, we have one kid and then one on the way. And our question is, is it worth pulling $300,000 out to fully buy a home in cash? If so, we will be losing about $102,000 due to federal taxes and withdrawal penalties.

I guess my question is, is that a smart move on our end? I'm 26, my wife is 24. And so that's kind of my question. Okay. So you have $700,000 in a 529? 529, educational account, yes. Where did that come from your parents uh my my grandfather uh wow money aside and it just kind of grew over that's a lot um yeah i just do you have kids i do yes my wife and i we have one one child and then we have actually one baby on the way here the next couple months so okay um yeah because with 529s, obviously, it has to be used for education. It can be passed down to your kids.

So their college fund would be fully funded. It can translate to retirement on down the line after a certain point as well. Yeah, I think it's after, I think the account. 62? 67? Well, I think it has to, yeah, it can transfer to a Roth IRA if the account's been open, I think, 35 years, maybe? That sounds right.

How long has he had it open, Sam? Yeah, it's been, I believe, since 2010. Okay. Yeah, and I was told by my financial advisor, doubles every seven years, about. Seven to 10 years from the market. Right. And it doubles. Yeah. How much are to ten years up in the market. Right. And it doubles.

Yeah. How much are you? We have about four doubles. Okay. And where are you guys financially, Sam, you and your wife? Are you guys renting right now? Do you own a home? Yeah, we currently rent. Yeah, currently rent.

Okay. Do you have any money saved besides the $700,000? About $35,000 in savings. Saved. Okay. Do you have any money saved besides the $700,000? About $35,000 in savings. Saved. Okay. Is that retirement or is that just in a savings account? It's just in an account. Yeah, bank account.

Okay. Perfect. And then how much debt do you guys have? Totally probably have, I mean, with our car payment, we have about $20,000. $20,000. $20,000. And how much do you guys make a year? I currently make $65,000. $55,000?

$65,000. $65,000. Okay. Okay. A little piece of the puzzle here. I'm seeing here that there's a lifetime limit, by the way, of money that you can roll over from 529 into Roth. And it's not very high.

It's only $35,000. Okay, $35,000. Okay, I was saying 35 years it's not very high. It's only 35,000. Okay. 35. Okay. I was saying 35 years it had to be open. I knew 35 was $35,000. Okay. Yeah. Okay. Oh, gosh. I mean, man, I never recommend. I mean, usually the case is not taking money out. I mean, this would be in a sense like it's not it's not retirement so you can't use it you can only use it for educational purposes and on top of that you only have you know two kids and if it doubles right every four years it's just a lot of money like a lot of money there's part of me that would rope off an amount for your kids that by the time they reach education age there's the right amount for them there's the

part that would rope off the 35 000 that you can contribute every single year up till that point um you can contribute it at the at the math at the max our roth ira limit every year until you reach that maximum now you might want to work with somebody to find out if it's $35,000 just for you, or if it's your wife as well. So I'd ask somebody about that. And then honestly, I might be wrong, but I think the rest I try to get my hands on, because if it's doubling, and you're right,

it would double every seven years, and it's just going to become more and more money that you're going to be taxed at 10% when you try to take it out. So I probably would alleviate some of this cash. And what would you do, Rachel? Yeah, I mean, that's kind of where I lean. My only hesitation, Sam, is, I mean, it's such a gift that your grandfather gave you guys. But when you enter in this amount of money, I just want to make sure that the house you guys buy,

the lifestyle that you you know and i would use some of this to pay off your debt and get an emergency fund and all of it before even buying a house um use it to your advantage in that way too um which again just to be clear for everyone we usually don't recommend cashing out college but because of the massive amount that's right realistically will not be used for education for two kids is kind of the dilemma right there. It's kind of like the way we talk about when people invest in stocks. We want people investing, but we don't want them investing in stocks. And when they do, we advise them to clear it out,

even though they're probably going to pay a penalty and a tax on, in the form of taxes on that so that they can pay off their debt or work their baby step. And in this case, it's very similar. It's like somebody had the right idea. They invested in 529, but they way beyond the limit yeah of what makes sense yes and so now getting access to that is going to be better for you in the long run yep so i have um hold on i have categories for you sam that i'm just thinking out loud what i would do um think about your your kids college okay and then maybe just for the fun benefit

because this is so much money think about grandkids and just say what if you know each of our kids had three kids and what if their college was go ahead and pay for because it can be passed down that's right so maybe you say what would what would it look like to pay for eight kids totals college two kids that we have now and maybe if they each have, I don't know, I'm just throwing out a number, right? Because again, that would be a cool gift if Grandpa Sam had already paid. So think about that. Look into the Roth IRA option that you can go up to the limit every single year until you reach $35,000. And see if you, I want you to do that with that money, $35,000 of it,

like Jade said, and then also see if you can open up a spousal Roth IRA. And if for some, you know, because of married, I don't know if taxes, I don't know if that will be allowed. Yeah. But if you can roll it over into your wife's Roth IRA too, I would do that. Okay. And then taxes will be a bucket too. Okay. So you have kids college, grandkids college for the fun of it. I don't know. I just like the legacy idea of it. Roth IRAs for you, possibly your wife. Taxes.

Next bucket, Sam, is when you do cash out some of that money, after all that's taken care of, debt goes first. Fully funded emergency fund goes second of six months of expenses. And then third, whatever's left can go on the house. So that's what I would do. But Sam, I'm going to caution you because we get this a lot when we talk to people that get an inheritance or they get a lump sum of money from insurance. And they've been having habits of using debt. Yeah.

Debt being part of their lifestyle. And something like this is such a gift because it's going to wipe all that clean and you guys get a blank slate which is beautiful and wonderful but your habits haven't changed because of it so you and your wife have to shake hands and look each other in the eye and pinky promise we're not going back this is not a get out of yeah get out of jail free card and then go back to the lifestyle you guys were living i want you to be wise with this money um because what Because what a beautiful gift your grandfather gave. Does that make sense? Yeah, it does. I think that was our thought is we really want to be smart with this money. We

do want to be debt free. That is one of our goals. And so, but I do also like the idea of categorizing it out and saying hey they have this much amount for our kids and that doubles over time you know throughout time and you know yeah kind of being a gift for not just our kids but also like you guys your same grandkids and so but um how old are you again Sam how old are you 26 I just turned 26 okay and when did you get access to the money? Sorry, I'm just reweighing this. When did you get access to it? I believe I got access last year. Last year.

Okay. So you've been sitting on it for a year. Okay. Okay. Yes. I'm with it. It's good. All right, Sam.

I hope that helps. I know that was probably a lot of ways to go about it, but I think... There's part of me that kind of wants them to do a little of the work, like feel it a little bit. If you wanted to, you could. If you're like, you know what,

whatever debt you have, pay off some of it. Like work through it a little bit. Like feel it a little bit. For the habit's sake, right? For the habit's sake, yeah. To feel some of that sacrifice. Because that money's not going anywhere.

It's just growing. Yeah, yeah. So true. So true. Something to think about. Yep. Thanks for the call, Sam. This is The Ramsey Show. Our scripture of the day comes from Psalm 119. Your word is a lamp to my feet and a light to my path. Ella Fitzgerald said, it isn't where you come from. It's where you're going that counts. That's good. I love it. I know. Not looking in the past, looking straight ahead. All right. I'm Rachel Cruz hosting today with Jade Warshaw. We're going to finish out

this show with Jessica in Los Angeles. Hey, Jessica, welcome to the show. Hi, ladies. Thank you so much for taking my call. So I'll just get straight to the point. I am married and I am expecting our first child. And thank you very much. So once I go on maternity leave, I will not be returning to work. I will be staying home with my baby. And my husband and I, he, I did Dave Ramsey's financial university and I'm all about saving and it got me out of debt in my twenties. So I'm safe, safe, safe. And my husband, he and I had very different financial upbringings and he's like, no, we need to invest, invest, invest. And so my question today is basically he takes on margin debt and that scares me and I know nothing about investing. And so I feel very uncomfortable with the margin debt that he has in our brokerage account. And I just wanted to get a second opinion like, oh, no, that's normal. Margin debt is normal. But like I said, that scares me. So just calling in. I'm like, I always tell him like you have to watch the Dave Ramsey show's, I'm all about Dave Ramsey. And so I was like, let me just call and get a second opinion. Well, good. Well, I'm glad, I'm glad you called. So when you say margin debt,

that he's taking on debt, he's taking maybe what he's gaining and then turning around and reinvesting it. Or what's, when you say that, what do you mean? Yes. He's borrowing money from the broker to invest it? Yes, he does. So the dividend pays off the margin debt. It also pays off the interest. And then the dividend also pays off our car payments. So he takes like what the Jody, I believe what Jody said, that's exactly what he does. Okay. I would not take on debt to invest in. I just, I mean, the way that we teach, we're just a zero debt foundation.

Yes. And so to that end, I would say no. And then to answer your broader question. Now, I don't know how your husband is going to react to this. I have a feeling that he probably if he's doing this, it's because he feels very strongly about it, in my opinion. I don't think everyday Joes do this. I think that they probably don't even invest at all. So I think that's going to be your biggest headache is I don't think, I think you knew what we would say about this. The problem is, are you going to be able to get him to just,

hey, can you just invest 15% of our income? do we have to do this margin debt thing like what have you said that to him you know um i've i haven't approached him with that but he that he invests 50 of his income and then 50 is what pays um like our household everything so 50 pays like our our rent bills everything else and 50 is investing so it's not 15 it's five zero okay and you want to save some up for this baby do you guys have do you have debt i'm all about saving um the only debt we have are cars which gets paid by the dividends so other than that no debt okay so there's just there's three different ways of thinking going on there's the ramsey way there's your way and then there's your husband so the way we the way There's the Ramsey way, there's your way, and then there's your husband. So the way we,

the way we would teach, and I think you know this, the way we would teach is we'd say, if you weren't pregnant, the first step would be that you basically are paying off your debt first before you even started investing. But I kind of feel like I'm barking up the wrong tree even saying that, because I don't even know that your husband will go for that. But just to clear the air,

that's the right way is pay off the debt first, save up three to six months, then invest 15%, save up for college kids, college, pay off your house, and then you can invest till the cows come home. 50%, I don't care. 70%, whatever. Yeah. What is he making? When you say 50%, he's investing.

How much? How much is that? He makes 181. 181. Okay. So, okay. So 50% though is for your lifestyle. Yes.

So 90. Okay. And how much are you making? I make 85. Okay. And what do y'all do with your income? Mine gets invested. Mine goes straight to investing. All of it? We just live off of his. Yeah, it's straight into the brokerage account. How much do you guys have in that brokerage account? I have an individual. He has an individual. And then we have a joint.

And so in my individual, I think I have $15,000. But partial of my income goes to individual and then also goes to a joint. We both tied. So it goes into a multiple of our brokerage accounts. Tell us the numbers because that doesn't make sense so far if you say you make $80,000 and he invests all of it, and then you have $15,000 in an individual account. So tell us all the numbers.

$15,000 in yours. How much is in his? In his, let me see. I'm pulling it up right now. I don't know what he has in his, but I can tell you in like three seconds. Let me pull that up. His individual is 141. And then in the joint, actually that's, um, I'm sorry. His individual is 49 and then our joint is 49. So this must've just started because you're telling me that you invest 90,000 of his in 80,000 of yours, but these numbers don't add up to that. We just started.

Okay. We just started investing in September of last year. Got it. Okay. And how much do you guys owe on the cars? On the cars, we owe 45 total in both cars. 45 total in both cars. Okay.

Yes. Okay. Yes. Okay. So, yeah, Jessica, I think what's happening, and it's easy to do, because if you get in these, like, circles of people, like, hey, did you know about this and the margin and what you can do here? And you watch a TikTok video, and you're like, wait, what? I can do that too? There's all these ways to do it.

And so what we teach has been a proven system. People would call it boring. Your husband may just think we are boring old-fashioned when it comes to money and the way to do it. But it's just the most proven, peaceful way to live with your money. It is how to build wealth the right way without playing all the games, using your income, not anyone else's, to fund your life, fund your future. And that's what you're dependent on.

There's an autonomy that we teach of not owing anything. And what that brings ultimately, Jessica, is a level of peace. When you don't owe anyone anything, I mean, scripture is clear. The borrower is slave to the lender. There is a part there that you emotionally carry around when you sit there and play these games. And so what i would do jessica and again i don't know if you guys would go for it uh because it's going to feel extreme

on one end but i would i would cash out one of the brokerage accounts of the 49 000 pay off the cars um have some money and that was my thought yep i would do that i would do that to pay off the car yep i would do that but yeah no yeah no you didn't cut you off, but yeah. No, yeah, no, you're right, yeah. And he was like, no, we invest. Go ahead and pay it off. And that was my thing. And then Jessica, he's, listen, he is a, he is all in the numbers. So what I would do is I would just lay out a very simple plan. Okay, you take this money, it goes to zero, but we have no debt.

So that's off the table. We're going to take this other money, put it in a high-yield savings account for emergency funds, because we got a baby on the way, we got a life, and that's what this is going to look like. Then we're going to take this other brokerage account. Maybe we leave it. But here's what it's going to look like when we fund 15% of our income into retirement, which yours is going away because of the baby. But you're going to have $181,000. And I would do the math, Jessica, just for his sake. Go ahead and you can go to RamseySolutions.com and use our investment calculator take 15 percent of that income and plug it in and how old are you guys uh i'm 30 60 33 okay so do it from age 33 to

age 63 15 of your income and that's with your income not going up the numbers you're going to show and do you know a conservative rate of return you can do 10 whatever you want to do but run these numbers and show him that you guys are going to be okay and when you do it this way it's maybe slower but there's no risk there's no debt in the picture and you guys are working as a team because every there's a lot of separation here um i want you guys working out of one account i want you guys seeing this as really as one as well in well in your language even. I appreciate it.

I definitely appreciate it. I kind of feel like maybe I'm not too far off because I know I have my thoughts about not having debt. And I was like, well, I know zero about investing. And my husband, he's a very intelligent man. But still, I think he feels like, no, this is the way we're going to do it. But I'm like, well, maybe he's right. Maybe I'm right. Like maybe there's truth in both sides. So I really appreciate your ladies input. And yeah, thank you. I would love to like say a prayer, light a candle, but I hope to reduce our into our reduce what we invest.

But yeah, well, just so you know, just so you know, I plugged in the numbers for you. If you invested 15% of $181,000 for the next 30 years from 36 to 66, you've already got $50,000 in one of those accounts. That's over $6 million. I'm just letting you know. Yeah, you're going to be fine. That ain't bad. You're going to be fine. So great, Jessica.

Well, good luck with everything, baby and all. We're excited for you. Thanks to all the guys in the booth for making this happen. Oh, and Taylor. There's a lady in there. Making this show happen. Thank you, Jade, for always being a great host. You bet.

And thank you, America. And remember to take control of your money and create a life you love. Dr. John Deloney here. Mental and emotional health challenges, broken relationships, it's all just part of life, but they don't have to define you. The Dr. John Deloney Show is here to help. It's a caller-driven podcast where you can get practical advice on dealing with anxiety, loneliness, depression, relationship challenges, your kids, and so much more.

Listen to questions from our callers, or if you're walking through a tough situation and need some help, give me a call. You were never meant to do life alone, and that's what this podcast is all about. Follow along on Apple, Spotify, YouTube, or the Ramsey Network app. Remember, you're worth being well.