The Ramsey Show - Bigger Financial Problems Leave Less Room for Bad Decisions

Episode Date: April 3, 2026

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Brought to you by the Every Dollar app. Start budgeting for free today. Normal is broke and common sense is weird. So we're here to help you transform your life. From the Ramsey Network in the Fairwinds Credit Union Studio, this is The Ramsey Show. And I'm Rachel Cruz hosting this hour with my good friend and co-hosts of Smart Money Happy Hour, George Camel. And we'll be answering your calls, so give us a call at AAA 825-2-225. and we'll be talking about your life and your money.

First up, we have Jimmy in Los Angeles. Hi, Jimmy. Welcome to the show. Hey, Rachel. Hey, George. Big fan of y'all's. Thank you so much for what you do. I really appreciate everything that you guys do.

And I've gained a lot of knowledge these past few weeks, learning more about what you guys do and how to kind of like financially plan my future. but I've kind of gotten myself into a sticky situation. And I'm just trying to see if I can maybe get some guidance on trying to find a way out. Sure. So what's going on? So late 2024, you know, I retired from the military. I served for 22 years.

And earlier that year, I decided to open up like a kind of like a shop and where we just do like detail services, paint protection film, wraps and things like that. and it actually cost me a lot of money throughout that year. I'm sure. How much? To the point, well, we're at a point now where we're like $580,000 in debt at this point. Okay. That first year, we took like a $220,000 loss.

Admittedly, I think I hired too many people full time. Kind of went in too fast and too hard on that. And it kind of really hurt me. So I had to take like an SBA loan to kind of get caught up and used a bunch of credit cards. And then the year after, we netted, so just last year, we netted about 35% net loss. So we had another net loss, but it was a better net loss. You're still throwing money at this thing? I'm still throwing money at this thing.

I mean, it seems like you're kind of, it seems like we're kind of like making a way out of that. I mean, what's the stop loss here, a million dollars in debt, and then we'll call it quits? I mean, at some point, you just got to go, this ain't it. I would rather pack it up now versus try to, it's like a gambler where they lost a bunch of money in Vegas and they go back to go like, well, now I got to win even bigger to get out of this mess. Right. That's so I was afraid of. and through this process, I kind of been, you know, a free labor. So I haven't been getting paid by my business. On top of that, how are you paying your bills through more debt? Do you have

retirement through military? I do. Okay. What's that per month? My wife works too. Okay. I pull in about 5,500 take home per month from my military retirement. And then what does she make about, she makes about, like, take home $4,500-ish per month. Okay. So 10 grand a month is what we're taking home. And that's the hard truth is that's the number we need to actually pay down this over half million dollars in debt. Right. What does the trajectory look like for revenue? It's looking positive. Because, you know, last year, I said, even though we had a net loss, It was a smaller net loss

And I think this year We'll be in the positive But I'm struggling because Like I've been working for free for two years Essentially, that's business And digging deeper in debt I mean 35% loss I mean this is just a

Yeah Very expensive hobby at this point This isn't a business Even if it breaks even This isn't worth it No Right Yeah

Um Yeah Jimmy When you when you project out, what do you, with all these loans, how much is the, is it half a million now or how much debt in general? I'm just trying to, I'm trying to project out like what by, I don't know, in the next like month or two, like how much total debt are you guys in? So I've written everything down. So as it stands right now, on the business side, we're at $580,000 in debt. I know I have a PhD and be in a bozo. How much of that's credit card?

How much of that is small business loans? So, $165,000 of that is credit. And then the rest is split up between the SBA, working capital, and a line of credit. Because I'm just thinking the credit cards, you know, if you get behind, those will be easier to settle than some of these loans directly.

The SBA loan. From the bank. What does your wife think about that? What does she think you should do? She's not very happy with it, but she's been very supportive and very understanding throughout the process. So an absolute blessing to me. Definitely not an added stressor. She's been an anchor for me, for sure.

Yeah, I mean, a little bit, Jimmy, but a part of me also is like, you guys aren't living in reality. Like, she should be kind of flipping out. Do you know what I mean? I'm like, I mean, I understand the anchor of feeling supportive, but you're feeling supported and doing something that's continuing. continually getting you guys deeper and deeper into a problem versus saying stop, stop where we are and we're done because we can't just keep doing this. And the problem too is that the guesswork for what you're possibly going to do this year, I mean, you know what I mean? It's like you can't, you can't predict it. And so you guys either have to say we're going to try to stick this out for a

year with no more debt, no more debt. And if that means we have to close up parts of the business in order to do that, okay, to see if we can get some revenue in here. But you guys can't just keep digging yourselves in a hole and expect just to come out the other side. Right, right. So I would sit down and you guys, I mean, you either need to make a decision. If you were to stop this completely, do you guys have things that you can sell off in the business? Like, is there any way that you could gain any of this money back if you were to close shop today? From like a real estate perspective or like, you know what I mean?

equipment you have in the business. Yeah, I have about $50,000 worth of equipment, but I think that's tied up in the SBA loan. They would have to, you know, I'd have to get permission to sell that off to pay that loan down. Yeah. And that's why I was like worst case, you know, I'd really want to avoid bankruptcy. It's definitely not my first choice. And I even thought about getting like a job, like, so I can just get some sort of income. and then using that job to pay down this debt.

But since it's a business, I don't really want to, like, create murky waters with me paying off business debt with my own personal income. It's all tied to you anyways, Jimmy. Go back to the papers. Look who signed it. It's you. Yeah, yeah. I mean, they're all going to come for you. It's not like car detail or LLC.

Well, they owe the money, not Jimmy. Right. It's guaranteed by you. And so that's the hard news is you have to now picture this. Like, it's just consumer debt that you took on. And so you're going to begin the business of cleaning it up. And I hope that you can find a new job that can create a better income that will allow you to clean this up faster. But if you just even sell a 50 grand worth of equipment, that's 10% of your debt you just knocked out.

And so you've got to start making progress. I would not sink more money into this thing just to be $600,000 in debt, $650 and hope we have less of a net loss. I'm heartbroken for you, man. Thank you for your service, too. 22 years. That's incredible. I hope you guys can climb out of this. Dave, we got a lot of calls on this show where life happens.

One day someone's healthy, they're working, providing for their family, and then a curveball hits. You know, we hear it all the time. A car accident, a cancer diagnosis, a heart attack, and suddenly everything changes. Yeah, and that's why you've always said that having term life insurance from Xander is essential because it protects your family if the worst happens. Yeah, that's right. You need 10 to 12 times your income in coverage. No gimmicks, no whole life junk, just straightforward term life protection.

But there's another piece that people often overlook, and that's long-term disability insurance. Yeah, it's important to understand the difference between them. Life insurance steps in when you die. Disability insurance steps in while you're alive but can't work. So it replaces a large part of your income so the bills still get paid while you get back on your feet. Now, if your employer gives you free disability insurance, great. Take it. If it's discounted there at a better price, take it.

But if not, Zander can help you find the right plan. Whether you're single or married, it's not optional. If you're going to be out of work for a while, then you need to make sure the money still showing up. And that's why Zander is our go-to. They make it super simple to get the right coverage at the best price, no pressure, no upselling. I've trusted Jeff Zander and Zander insurance for over 25 years, and so is my family. So don't wait. It's fast.

It's easy. all the difference. Go to zander.com or call 800-356-42-82. Protect yourself, protect your income, protect your family. George is up next in Newark, New Jersey. George, welcome to the show. Are you with us? Thank you. Thank you. Sorry about that. Oh, absolutely. Yes. What's going on? How's going on, guys? Rocking and rolling. First of all, you guys are awesome. I've been working with you all for maybe like going on two years. About to be debt-free this year and everything like that working with me. Smart vester pro in Maryland. Oh, good.

Amazing. I had a quick question for you. Hopefully, this is your area of expertise. If not, then hopefully you got me in the right direction. Before I was working with you all, I was ignorant to a lot of stuff. So I had got mixed up back in maybe 2016 with a guy from my gym. Long story short, he was running an air. LCL supposedly, and I was investing into a high-interest savings account.

So basically, I got scam. Long story short, he got me for 38 grand. Oh, no. And then I hired lawyers and everything like that. So all in all, I was out maybe like 40, about 45 grand. Oh, my gosh, George. I'm so sorry. Was it like a Ponzi scheme kind of thing or like a, like, or he would take your money

and invest, you know, put it somewhere else, thinking he would make a difference, and then he ended up not and lost all your money? Exactly. Oh, man. I'm sorry. You know, again, this is before I met you guys. I wish I wouldn't met you guys sooner. But that's done. So it's kind of a throwing in my side because I'm trying to figure out whether I should continue going after him because I already went to court.

We already got the judgment. He didn't show up and everything like that. You know, he got served and everything. But the thing is, you know, I had to learn about the long. because his judgment is just basically a piece of paper right now because he got rid of all of it. Exactly.

If he doesn't have assets, he got rid of all of them. He doesn't have income you can garnish. There's not much they can do. That's basically what I want to do. When you say you've been chasing him for four years, who has actually been the person trying to track him down and get him to pay? I hired a debt collection company.

And then at first it was, you know, it was free and everything like that because, you know, if they get paid, I get paid kind of deal. But then after maybe like a year or two, then they asked me if I wanted to like increase the, some kind of excuse they gave me.

And it was like another two grand or whatever I think to push that for it because this is during the pandemic. Yeah. So to push like paperwork for it. And so that added to the money that I'm out. And I wanted to see if you guys think I should just count it as a loss or just, you know, because without assets, you know, now that I know that it's just. Yeah, that's my fear.

You spend 25 grand chasing this guy down, and then it turns out you don't get a dime from him. Well, now you just lost another 25 grand. So it may be time to emotionally write this off and call it a stupid tax and move on. Yeah. If it's been four years. I mean, this is weighing on you. It's living rent-free in your head, and I think it's time to move on. Oh, yeah.

People do all kinds of dumb moves and lose 40 grand. You know, I went in 40 grand to consumer debt back in the day. And so I'm going to chalk it up to a life lesson that was hard to learn and never let it happen again. in. Gotcha. Okay. I figured that. I'm so sorry, man.

I'm sorry, George. I'm like, when I'm like a dog who's like, I want to get this guy. You want justice. I want to go full John Wick, man. You know, but at some point. And it was $38,000, you know, it's not $3,800. Like, that's a lot of money. It's a lot of money.

Yep. But the crazy thing is, is I do think once you emotionally kind of just get over it, right? You detach and you're like, okay, I am moving on. you start to really, really see what you can do and what you have the power to do as you're experiencing now on baby step two, George, like you're getting yourself out of debt. Like that money will come back, right? Like you will be able to turn all this around, but it's just emotionally having just to let it go, which sucks. Sorry you're dealing with that. Maybe this will get you debt free faster.

If you allocate all of your energy and focus and resources towards that, I think you'll feel a whole lot better. and it'll be a fun story you share with your kids one day when you're a multi-millionaire. Okay. Best of luck, my friend. That's brutal. Rachel, that reminds me when I got scam long ago. Fraud happened.

People opened up AT&T accounts, Verizon accounts, under my name, Social Security number, passed the dress, wracked up $1,700 on both accounts, never paid a dime. And so I had to deal with that. And luckily, I had Zander ID theft, and so they stepped in and helped clean this mess up.

But I found who the people, because I was a sleuth. You found who it was, like the individuals? Yeah. And I really wanted to go full, you know, wishbone on the case and go, I'm going to investigate. I'm going to bring them to justice. And then I just let, I'm like, what am I doing? What am I doing?

Just Nancy Drew. I don't know how dangerous these women are. Yeah. Was it women? It was two women. No way. Still have their names. Here, like in America?

They were in Boston, in the Boston area. I lived in Tennessee at the time, but they opened these accounts up in Boston. George. Yeah, there you go. I'm not going to, I'll leave that for a future. investigations, but goodness gracious. It's a hard pill to swallow when it happens. All right, Dominic is in South Bend up next. Dominic, welcome to the show. Thank you. What's going on? So I've heard you guys speak about zero credit score and buying houses with manual underwriting. I purchased a home

years before hearing about you, so having zero credit score when buying my next one won't be an option. Sure, you have a credit score now due to your mortgage payment. Correct. Is that a loan going to be enough to maintain a good enough score? Yes. Have you made your mortgage payments on time? Yeah. That's great. You likely have a great score. So there's no need to open up new credit accounts and credit cards to try to increase it. When you go to get another mortgage, they're just going to look at yours and go, okay, is your debt to income ratio good?

Do you have a history of on-time payments? And they'll grant you that. So have you checked your credit score? Is it in the tank or is it solid? No, it's solid. I just, I wasn't sure if just a mortgage alone would be enough in the future. Yes. Or if they needed more history. No, you'll be good. And if you ever have questions about it, you can always contact, you know, Churchill mortgage, and they can walk you through what they actually look for. But the score is the score. That's what they're looking for. And so they're not going to say, well, you don't have enough types of debt. That's all factored into your score. And so if your score is solid, you're going to be fine. And once you pay off the mortgage, then six or 12 months after that, your credit score will be. disappear again. Okay. Until you'll go back through that process.

But you're on the path, man. Good for you. How long until you pay off the house? I don't think I'll pay it off. Not with that attitude, Dominic. What's left on the mortgage? Well, it's my first home.

I still owe 160 on it. Okay. Because you're saying you'll probably move homes, move houses. Yeah. We paid off. Gotcha. Yeah. Okay.

Yeah, I know that's a, but it's a good question because we do talk about people not having to worship at the altar of, you know, the credit, the FICO score, the credit score, because you can actually get a house called, you know, through manual underwriting. But if you have a bad credit score and you go and apply for a mortgage, they're going to pull your credit score regardless. That will hurt you. Yes. If you have one that's undetermined, then you can do manual underwriting. But if you have a bad credit score when you go and get a mortgage, and as you're getting out of debt charge for a lot

of people, consumer debt, your score will lower as you, you know what I mean? Like, as you're starting to get out. That's how stupid the credit score game is. You're like, wait, I'm doing it. I'm doing good things. I'm knocking out debt. And they're like, yeah, but we don't like that. We'd rather you keep it around and pay it perfectly. Yeah, so on baby step two, you guys, if you're paying off your debt and then you try to go and get a mortgage, which is not part of the, you know, that's Baby Step 3B, but if you try to do it earlier and they pull your credit score, it may not be great because you're paying off your debt, your consumer debt. But very few people, and they always go, well, what about once I'm out of debt? I'm like,

well, then you still need to save up your emergency fund and that still save up your down payment. And so you're talking potentially years of not having a score, which is fine. So your credit score will not be in the tank, as long as you actually close all accounts. If you still have any accounts open or you still have a credit card open, that will show up on your credit report and keep your credit score alive. So make sure when you pull that credit report, nothing is active. And then six to 12 months later, there's no real exact timeline, but that's what I've experienced and many that I've talked to, your credit score just becomes indeterminable. It doesn't actually go to zero. Yeah, it's not actually technically a zero credit score. We just like to say that because it sounds

cool. It's fun. What's your credit score? Zero. Zero. I don't have one. That's the real flex. And that's honestly how they operated back in the day, like in our parents' day. The credit score has only existed since the 90s. So before then, you're like, well, how did people get homes? Well, they looked at your actual tax return. You got a relationship with the bank. And they looked at your income and savings. And I went, okay. Your other bills to see if you pay on time, if you're a trustworthy borrower that they can lend money to, like they looked at you the person, which is what manual underwriting to us anyways. Instead of the computers going, Good credit score. Give them a loan. And so it's really not that difficult. I've done it myself.

I'm alive to tell the tale. So it's worth pursuing to become completely debt-free and then do it the right way. At Ramsey, we don't partner with companies chasing trends or pushing gimmicks. Trust is earned. And that's why we send people to Fairwind's Credit Union. See, a lot of banks rely on teaser rates, marketing hype, and fine print. But that's not how Fairwins operates. They've been serving members for 75 years, and you don't last that long by cutting corners. You last by serving people well. There's a reason their name is on the studio wall. They've built products that help you manage money intentionally not pull you into debt.

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Trina is in Florida up next. Trina, welcome to the Ramsey show. How can we help today? Hi. Hi, I'm so excited you guys. We're excited as well. I'm glad you called Trina. we're excited to talk to you okay guys I'm having this like issue I always said I wanted to

retire about it I'm almost 40 I am almost 40 wow it's an aggressive plan my dad did it twice before he turned 40 and I'm just like wait I can't wait wait hold on he retired twice what you mean so he retired from the city and then he retired from boxing so he like He got to retire twice before he was 40. You said boxing? Yeah. Like he was a professional boxer? Yeah, he was like semi-pro.

That's pretty cool. That's legit. Did he have to do it to earn money? Yes. Okay, so he didn't really like get to retire. He was semi-retired while semi-pro and then fully retired. Yeah. Okay.

I'm just trying to relieve some pressure for you of like the reality. Is that where this idea came from then? You're like, I want to be like, dad. I want to retire by 40? Well, it inspired me, yes. Okay. I've always been like an overachiever or car. Oh, like, yeah, an aggressive goal, you know, of something big that you're like, I want to work for that.

I get that. Okay, okay. Perfect. Keep going. So, yeah, how can we help? So I ran into a financial situation. It's not a lot of debt. It's like $44,000 worth of debt and I make about $60.

So I want to pay this debt off. What kind of debt is it? about um it's like 20,000 in a car um like 4,000 about in personal loans and like 2,000 in my son's private school that I still owe in credit cards like 16,000 in credit cards. Ooh, 16,000 doesn't feel like a recipe to early retirement. Like if I was trying to retire early, I'd probably go, hey, I'm going to make sure I don't owe people money and have money saved on top of that. I know. So how long has this been floating around?

How long have you had this debt for? So I filed a bankruptcy about two years ago. This was when all of this started. So all of this debt was post-bankruptcy? Or did it get, what you want a payment plan? What happened? So actually, the only debt that I don't take, like I don't have to pay back one of the personal loans, one of the credit cards, and yeah. Because of the bankruptcy?

Because of the bankruptcy. An issue is that I want to keep the relationship with that bank, and I want to pay them their money back. because I never wanted to put the items in bankruptcy. I was still paying it, but they said that because I filed a Chapter 7 that they had to put it in the... What caused you to file bankruptcy two years ago? What were your numbers then? So then I was making about... It kind of flip-flopped.

I was making about 40. Then I went back to 60. Then I think before that I made 80. So what happened was I was working for this company. I had moved. I was working for this company. Basically, I decided I wanted to open up my own company because we're under government contracts. We have a certain criteria that we have to meet.

When I said that I wanted to open up my company, the government agency said that they had to take away all my clients. So basically I went from having, you know, a decent income to like having nothing the next day. Okay. And it was all because of this new business. Yes. So the new business never took off, but you took out loans to float the business for a bit. And that's what called the bankruptcy? No.

So when they took one client, it took a while. It took about a year and a half for me to open up and to get clients. So I started having clients in September. I had like maybe 15. Now I have like 25. And that's all I need financially. Okay, but Trina, what caused the bankruptcy two years ago? Was it consumer debt?

Was it business loans? What was it? So I had these student loans and I put them in an after-sale proceeding where I filed bankruptcy to get rid of the student loans while I was waiting for my agency to open. When the agency didn't take off right away, I started using my kids' college funds, my retirement. I started pulling everything out.

And so I started listing and I started working with another company, but that company just didn't pay that much. Gotcha. Okay, so Trina, I have a new goal for you. I think instead of retiring at 40, we are going to learn to live debt free. Which I usually do. Trina. So far, it's been everyone else's fault and the government took your clients away.

No, no, I'm not saying she's pushing on everyone's fault, but like, no, Trina, you've got to be able to say, like, yes, I'm used to living with debt, though, from student loans to where you are now, there's a pattern of you using debt. Can we say yes to that? well that makes sense yeah i wasn't looking at like that sorry no you're great no i just want to make sure we're tracking so i think in order to have a completely new mindset with money from where you've been of saying i'm living completely debt-free debt's not an option debt is not an option i'm going to save up and pay for things i'm not going to be making unwise decisions about purchases and pulling money out of retirement or kids college or investments because that's not wise right where that stuff is all for the future and i'm going to

learn to live within my income and my means. And that means making hard decisions about lifestyle and about, you know, yeah, I mean, life choices and everything. And so, I mean, genuinely, I would make that the goal. I would make it an aggressive goal to get out of debt in, I don't know what, two years. Like make a, make a goal to, aggressive goal to get out of debt to save up a fully funded emergency fund. And freeze your credit.

That way it stops you. debt-free plan. Two and a half years? Oh, perfect. Okay. Okay, that's so great. We never even got to your question, Trina. I'm sorry.

There's so much details to jump into. What is your actual question we can help you with? Well, I wanted to basically flip this piece of property. They have a piece of land that's for sale. It hasn't been impacted it. I wanted to do like a creative finance to see if I can. No, no, we're off the path. Remember 10 seconds ago?

We're the new goal. The new goal. Remember? Creative financing just means. Hey, I'm going to do stupid with... That's fair. That's fair. That was her question. That's fair. We made a new goal 10 seconds ago. Yeah, okay. So how would you answer, how would you answer this now? Trina, answer your own question with your new goals in mind.

So I am going to stick to my two and a half year budget that literally just looks like this month. Let's go. And that's what we're talking about. Trina, see? Be debt free after that and then maybe save the money instead of... Yes. Look at you. And how old are you, Trina? I'm 38.

38. Okay. Can I tell you, if you don't retire by 40, you're not a failure? I promise. Can I just promise you that? If you don't retire by 60, you're not a failure. How about this? You're not a failure, period.

Oh. There you go. That's the most encouraging thing I've said today. Rachel can attest to that. But the truth is, we have these aggressive goals, and we need to create action. to get there and we can't hold ourselves to these goals because life is going to happen. And so it's okay to pivot the dream. But one thing we can't do is pivot and going backwards and

rob our future, rob our children's future. You are worth more than that. And so from today forward, you're a person who doesn't go into debt, who doesn't owe people money. And all your decisions can be based off of that value system because that brings you freedom, Trina. There's no shortcut. There's no like, okay, I can do this creative financing here and do this and I'll make 20 grand just like that and look at that like that's that doesn't work that's not the real world it is it is hard work it is the long game it is a marathon it's not a sprint and it's just a different mindset you have to be in to get true financial freedom and true control over your money and so you do have to shift the way you've been doing it train if you keep doing what you've been

doing you're going to keep getting what you've been getting and so yeah I'm glad that Trina answered her own question. We got there. We're not going to finance a piece of land to build a home to flip it. We are going to work on getting out of debt. De-risk your life. De-rease equals risk. More debt equals more risk.

And so this creative financing is just adding more risk to the puzzle. And so be free. That's your best path to an early retirement. You're awesome, Trina. We're rooting for you. We're rooting for calling. If you run a business, you already know this. Bad information leads to bad decisions.

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head to Ramsey Solutions.com slash smart tax and start filing. Matt is in Colorado Springs. What's going on, Matt? First thing I just want to say, you all are such a blessing with so many people. Oh, thank you. I've listened for quite some time, and I'm just thankful for what y'all do. And now I find myself in a situation where I could use some advice.

Thank you, Matt. Yeah. So I guess the brass tax of the situation is I've got a pretty considerable amount of IRS debt. I own two businesses, and I've just kind of got myself in a little bit of a whole. And so the question is if there's any credibility to tax relief programs and things of that nature. Well, they're often marketed to people who are desperate and vulnerable, which is never a good sign, you know, when they're – that usually means they're predatory and they're promising, way over promising and under-delivering. So what they tell you to do is basically, hey, don't pay a dime. you pay us instead, and what's going to happen is tanks your credit, which with the IRS, not the

people you want to not pay. And so they then try to settle for you and save you money, which, by the way, you can do all of this yourself. And with the IRS, they can already set up a payment plan. So there's really no use for a tax relief program in this situation. Okay. They're just paid middlemen between you and the IRS. Right. And the other... office that I contacted was more of like a tax attorney that talks more about the future plan for the taxes for the business to avoid this issue in the future, which may be beneficial.

Yeah. But then his office was saying, you know, we don't recommend these tax relief programs because they're over-promising under-delivering. So, perfect. I'm in line with an attorney. That's a good day for me. Okay. So I guess the question is, if you were in this situation, what what steps you might take. Yeah, how much do you make a year, Matt? It's kind of relative, probably somewhere around 100 or so. Okay. And do you have anything in savings?

Yeah, I typically try not to dip below 15 or 20 in savings. So you have 20? Yeah, about right there right now. Okay, yeah. The issue with my particular business is extremely serious. seasonal with construction. So, you know, I kind of hunker down in the wintertime and, you know, rice and beans and just about nothing. So, but then in the busier season, it's easier to tackle some of these things. What kind of construction? Outdoor, you know, fence and deck and a lot of carpentry point of stuff.

Cool. Well, the good news is you can still work during. that time and make money, and you can definitely pay this money back in a reasonable amount of time. Do you have any other debts that are holding you back from creating the margin to knock this out quick? Yeah, there's still about 20,000 remaining on a HELOC. And I already know that's a teeth grinding word for you probably, but that, you know, it's one of those situations where I sure I could pay that off, but then, you know, you have to worry about the bills right now. So if I were to pay it off, I would wait until the money's coming in more fluently. Okay.

So you got 40 to the IRS, 20 on the HELOC. Anything else? That's about it. I've paid off, I don't know, 20,000 something in credit cards. Great. Good for you. No car loan? Yeah, well, I would, this changes the debt snowball a little bit because IRS debt gets moved to the front.

So even before the HELOC, I would be tackling this 40. And I would just make it an aggressive goal. And again, I don't know if it's a payment plan that you contact the IRS with. I mean, I would try to have this all paid off in less than a year. Yeah. So I guess other pieces of the equation are I've got to file the last two years of taxes. I'm behind on that. So there will be probably another 10 to 15 after all the expenses and whatnot.

So let's call it 60. Is that fair? Sure. So if we call it 60, you know you owe 60. set up a payment plan with them, and maybe it's, hey, you're going to pay $1,000 a month or $2,000 a month. And then once you get down to that, you know, you got $15,000 left, I would use your savings to just knock it out. And then you can replenish the savings. Really, what you do is then attack the HELOC, then replenish the savings.

So I guess the questions then become, you know, I pay a considerable amount of additional principle on my home. Or does it make more sense to factor that into this equation? Yes. Yeah, I would just pay your mortgage. I would make the minimum mortgage payment. Why are you paying extra on the principal of your home right now? Generally, you know, you look at the amateurization schedule and all of that, and it, you know, over a course of time, it just makes sense. Yeah.

And it does in the right order, but you want to get those stuff cleaned out. So if you went down to just your mortgage payment, how much does that free up a month? Probably about another thousand or so. Oh, great. So how much could you reasonably put towards this IRS debt every month if you got a great? Well, this is where it gets tricky because, you know, I listen to your show constantly and people are like, well, I make this exact amount every month or every two weeks. And for me, I have months where it's 15,000, and I have months where it's... Sure. Some peaks and downs. But you've been doing this a while, so you probably could look at a calendar and semi-guess. Like, this probably will be good months here, low months here. So, yeah, so you may be putting, you know, maybe, you know, 13, 1400 towards this on a low month. But a good month, you could be throwing... 3,000 at it, right?

Sure. So I would kind of just map it up that way. And I'm already set up on like their minimum amounts, 400 something a month. So I've been actively attacking it for a couple of years. But it seems like every dollar that goes into it's just paying off the occurring interest, you know? Right, right. You need to get way more aggressive on this, which means all focus is on this IRS debt, no extra on the mortgage. Your budget is bare bones.

You are just covering four walls, food. utility, shelter, transportation, insurance, anything else is going towards this. And try to make it to where there's no gap in income. Now, I understand you're going to have some really good months and some rough months, but I don't want you just sitting around going, well, there's no work to be done right now. Sure. So I guess in general, you wouldn't, you know, I mean, I could run the HELOC up more and pay that, and it might be less percentage that I'm paying.

We are not adding a cent to the HELOC. We're not going to keep going with this line of credit. We are done with that. So just keep it where it is, keep up with the minimum payment, and then all of your guns are pointed toward this IRS debt for the time being. Now, do you think it would make sense to sell off additional assets to try to do this? What do you have? Well, I've got a considerable number of vehicles and machinery that are mostly associated with the business.

I mean, for all intents and purposes mine, but the business owns them. Yeah, would it decimate the business income if you sold these off? it though to run your business? Well, it's probably like a half and half kind of number. I mean, you know, skid steers and tractors and things that are relatively essential. That you have one piece of machinery you're thinking of that you're like, okay, I could sell that and be okay. Doesn't get a lot of use, doesn't create a lot of revenue right now. Yeah, yeah.

What could you get for that? I mean, probably somewhere between 15 and 20. Wow. thousand? Yeah. That period with your savings gets you out of the IRS debt like tomorrow. Yes. Yeah.

I kind of figured you all would be on that boat. And you can always buy dues later if you need it, right, with cash? Sure. Yeah. And again, that's all saying that that's not affecting your business. I don't want you to have to turn business down. I don't want you to lose half your income because you sold this thing. Right, right, right.

So you want to be smart about it. But if it's something that you're really not using a really need and you get 20 grand off of it, yeah. I'm doing that for sure. Sure. Yeah. I'm a huge advocate of not having car loans and I fix them all myself and whatnot. So that's great. Yeah.

Anything you have, Matt, I would. I would because I think if you had no IRS debt and no HELOC, how would you feel? Oh, like I could scream. Like amazing. Hi, I could scream. I'm dead free. Exactly. Yeah.

So I'm like, yeah, whatever you could do to get to that level of peace and control is what we're after. And then later when the business is doing great and you have all this freed up money because you don't have debt. you're able to save and if you need to go buy some equipment. Can I flow some equipment? I'm changing the Dave quote. Now it sells so much stuff the skid steer thinks it's next. Because it is, my friend. Good luck selling it.

Hope you get a great buyer who's happy to pay you what it's worth. Getting married changes something in you. It sure did in me. When you say I do, all of the sudden life isn't just about you anymore. It's about we. And one of the most grown-up things you can do for that we is to make a will at Mama Bear legal forms. See, being a grown-up isn't just about jobs and rent and splitting up the chores.

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Up next, we head to Charlotte, who is in Columbia, South Carolina. Charlotte, welcome to The Ramsey Show. Hi, how are you? We are doing great. How can we help today? My question is, well, my husband and I are, we have $100,000 of student loan debt that we just started paying off.

And my dad promises that he would help pay this debt off. However, in the last year, we wanted to cut ties with him. Sorry, you're breaking up with us, Charlotte. Can you speak directly in your phone or try to get to a better spot? I heard your 100,000 suit loans. Dad said he would help pay them off, and you recently had to cut him off? Yes, we did. We had to cut ties with him.

And so we are now... Like the relationship is over? Mm-hmm. Okay. Yes. Got it. Correct. Yes.

So we are now just looking into this debt now for our own to pay off. And my question is, what tips would you have to pay this off quickly? I don't want this to be looming over our heads for longer than it needs to. We agree. What did you get your degrees in? My husband got a law degree. So that's- Oh, got a lot of that.

Perfect. So is he practicing law right now? Yes. Okay. And how much is he making him a year? He is making a little over 100K. Okay. And what are you making a year? I'm just making a little over 20K. I'm working part-time. We just had our first child back in October. Okay. Oh, congratulations. Thank you.

Okay, great. So, yeah, I mean, the most efficient way to do this, Charlotte, is if you have multiple student loans, do you, or is it all one loan? It's just one loan. Okay. Yeah, so it's just going to be, you know, taking out. The mountain. Throwing as much as you can every month on top of the minimum payment, just throwing as much as you guys can. So it's make as much as we can, every month, spend as little as we can and use that

difference, that margin to knock out this debt fast. Because if you guys make $120 a year, if you lived on $60,000, Charlotte and you guys basically had no lifestyle, you're just like, listen, we are just going to just live on. what we got and you threw 60 at it. I mean, in a year and a half, you guys don't have this paid off. Okay, okay. So it's just you got to live like a broke law student and not like a lawyer. And that might be a, I don't know what your lifestyle is like, but that's going to be a big shift.

Yeah. Yeah. Do you guys have margin every month in your budget? We definitely could. We could have more. Yeah. So make it a goal. could you this month with the next paychecks coming in throw $4,000 on top of the minimum at the debt?

Yeah. Yeah. You're done in less than two years. I mean, that's the math of it. There's no like life hack shortcut. Now, if you were doing the debt snowball and you had multiple debts, we'd say attack the little one first, minimums on the rest and create some progress. This is a little bit harder because it's just you're, it's like paying off a mortgage. You're just staring down this mountain going, all right, I would celebrate the wins.

every $10,000 you pay off, you guys have a little fun, whatever you decide to do. And that'll keep you motivated along the way. Maybe make it visual. Maybe you have like, you know, rings and chains across the house or on the fridge, whatever you guys decide to do, making it visual, having a deep why. Maybe this child is your deep why of, I want this kid to grow up in a house that doesn't know debt that has financial stability. Yeah, and it probably is, there's probably a painful element too, right?

That it came, you guys are doing this because of a. a relationship that was fractured. So every, you know what I mean? It's kind of like the sad reminder too of having this around of like why we have to pay this off. So there is a part too of like, oh, I just want to add. You don't want it to drag out. I just want it out of my life, you know? Definitely. Is your husband on board with this? Yes, he is. We're in the very beginning stages of really talking about it, which I feel I feel behind because it's been almost a year that we've had to cut ties with my dad. But it really does just kind of feel like the dust has now settled more with that and then with having

our son. But so yeah, we're just in the beginning stages of like really coming up with a plan. Tell me this, Charlotte. He wasn't, your dad wasn't paying your husband's debt for law school, though, just yours, right? He was going, he never paid any debt because when all of this came out with my dad, we, had just like maybe for two weeks been put on a payment plan for the debt. Okay. But was the expectation that he was going to pay your husband's law degree?

He had said he would. Oh, okay. Okay. Okay. So it was the whole day. Because I was saying is if he just promised your debt and yours is 10,000 of the 100,000, you know, I was going to ask why you didn't address. But he's, but it was set out loud that it would even.

So this wasn't on your radar and all of a sudden relationships broken and now you've got 100,000 sitting in your lap to pay off on top of the grief. And so this is a lot. Yeah, it is sad. And it's going to be, it's going to be tight. But, you know, less than two years, the baby won't remember it. It'll be a memory for you guys. Remember that time we worked our tails off for two years to get to a place of financial stability? And you will not regret the sacrifice you're making right now. I'll tell you that much. Yeah. Yeah. Would you take out, We have a high, a high-ish amount of money and a CD account, but a two-year CD account. So I don't think we can't touch it for like another year.

How much is in there? Yes, we're not. Like a little over $75,000. Fantastic. Well, I would also look at what the penalties are for taking it out before it matures. Because if you're going to pay more interest in student loans than the penalty is, then it's worth cashing out. Okay. And that gets you out of debt so much faster.

Yeah, yeah. What was that money you're marked for? We didn't really have any sort of plan for other than just to kind of keep it in there. And then maybe once it was done, give it up more, we were probably going to buy another house or like sell the house where now buy a little bit bigger house as our family grew. that money actually was given to us from the death of my grandfather, so it was kind of unexpected. So we really didn't have much of a plan, and then it was like, I got that. My husband started paying the student loan debt, and then everything happened with my debt. So I haven't thought about it that much.

Okay. Gotcha. Well, the other part you off to grieve is, hey, this was going to be like house upgrade money, and now it's paying off debt money, which is less exciting. But I would do that in a heartbeat, Charlotte. I would look into that tonight to see what the penalties are. And then depending on how aggressive you guys want to move up in house, still look at cutting back some lifestyle and saving up some margin and say,

okay, if we were to replenish this, you could do that in a year and a half still and get that money back. But I would go ahead and, yes. This new plan is we're out of debt six months by the summer. We're debt free. Yes, I would do that in a heartbeat. And then you guys save your income. and decide how quickly you want to save, how slow, but no one else is determining that for you.

Or you guys could say, no, we're good. And for the next year, we're going to just enjoy our life. Yeah, and maybe you can quit the part-time job after you get the emergency fund. No one's making you do it. We're a student loan. You have to make this payment. Yeah. Life is going to be on your terms soon enough.

And so far, life has just been happening to you and everything's being unexpected. And I hope soon you can start to get intentional and happen to your life, Charlotte. We're rooting for you. Thanks for calling. This show is sponsored by Better Help. Financial stress does not just damage our bank accounts. It can also take a toll on our mental and emotional health and our relationships. Money worries cause anxiety and they are one of the leading sources of conflict for all types of couples.

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Hey, y'all. Thanks for having me on. It's an honor to be speaking to you today. Thank you. How can we help today? Yeah, so favorite topic for you guys, money and family. Long time ago when I was 18 took out student loans with the agreement with my father that they would pay until the balance is zero.

35 now. Balance is still in the mid-70s to mid-70,000. Oh, my gosh. What was it originally? Yeah. It was over 120, so they've been paying it down. They've been making minimum payments. Well, that's a problem.

I agree with you. The issue I'm really having is that my dad is, he's totally fun paying it. He still makes the payments, but my mother constantly brings up the fact that they are paying for my student loans. It feels like there's strings attached when at the very beginning there were never those agreements. And there was a clear agreement, hey, we're going to pay these off. We can't, we don't have the money to cover it, but take out the loan and we'll cover it. Is it in your name or their name or both?

They're in my name. They have the money. I mean, right now they can snap their fingers and pay it off. But the way my father sees it is he can make more money in the stock market. So he just chooses to. Are your parents still together? Yeah, they're still together. Okay.

Are you married? financially I am married yes okay so when you guys are around your parents how often is that how often do y'all see them uh we i mean we live on separate sides of the country so once twice a year but uh even in some phone calls she'll still come and what does she say like what are her comments um a lot of the times it's like revolved around like oh you just bought a truck like that could have gone to the student loans or or you took a nice vacation like why is that money but you know Going back to why I said, that was never part of the agreement, so I'd never feel obligated. But then, you know, my father, he's like, yeah, I don't care.

I'm still paying them. It's whatever. Rather frustrating. Yeah. Do you push back on her at all? I do. I try to keep it, you know, calm and light, but my wife is really the one that gets frustrated by it.

That's why I was, as if you were married, because I feel like I would be like, oh, my gosh. See, this is the issue with the student loan stuff is these parents are like, sure, go take out whatever you want to. go take out and you're 18, Shane, right? And sure, you sign it. I mean, yeah, you're 18. You're an adult. So yes, you have some responsibility in the sense of like you chose to make that decision. But you also had fully functioning adults in your life that said, yes, and we would pay for this. So I almost would have a very kind, but a very clear conversation with her around the boundaries of these comments because it starts to erode the relationship. I'm guessing it already has.

Yeah. Doesn't sound like the holidays are. I mean, that's why you're calling, right? This is your, this is. Yeah, a lot of tension. Yes. Okay. Okay. So, yeah, I mean, I would, I would tell her.

And I, and I would be very kind, but I'd be very, very clear. And, and just, and to be honest with her and say, you know, mom, there have been multiple comments made. I mean, you could give her some examples. And the truth is, when I was 18, you all told me that you would take them out and you would pay for this. And I'm, I'm holding y'all to that word. I mean, that's what was said. If something has changed and you and dad agree on a different. from plan, I'm happy to have a discussion with you if that's the case. But that's not been

the discussion. And so I need you to stop, stop making these comments. They're passive aggressive and it's eroding our relationship. Can you do that, mom? And at that point, that's up to her. She's the adult that gets to make the decision if she wants to continue a very healthy relationship. And you can tell her, listen, I don't control y'all's money. That's your decision. So this is now a marital problem they have of mom disagrees with how dad is handling a debt they agreed to pay. That's a good point too. Yeah. So legally, yes, it's yours. They could stop today and it's going to come to you. Now they haven't done that yet and I'm glad that they're not intentionally trying to tank your life, but this might be another conversation with dad

of saying, hey, listen, you have the money. I don't care how much you could make in the freaking stock market. This is eroding our relationship, which is way more important than some spread you could make. And so you can try to also influence him to, you know, sort of this would solve everything, wouldn't it? If dad just wrote the check, paid him off and went, dude, it's been 17 years. I don't know. Would your mom be mad at that? Yeah, who knows. So she just doesn't want to even use any of their money anymore to pay for these loans. I'm sorry, can you say that again?

She doesn't want any of their money to be used to pay for any more of your student loans. She's just done with this whole thing. It's hard to say. I know they're financially well off. My mom is retired. My dad, he makes fairly decent living, and I know what their nest egg is in liquid and retirement. So I know, like, the money is there. This is not a big part of their world.

It's not a big part of our other old. And, you know, my wife and I, we make decent money. So, like, the payment could, it would be totally fine for us to take on. It's just, like, I need to know if I need to start paying my $80,000. Do you guys have the money to write a check and pay this off today? Not in, like, liquid assets. I mean, I could save a couple more months and it would be fine. But then it would just wipe out all of our liquid investment.

So my wife doesn't really want to do that one. So it would probably just be What I'm hearing is either way, someone's going to be angry. And so that's the thing we have to make peace with is who do we want to upset? And the truth is you can't control how they react or respond. All you can do is be a person of integrity and have the conversation. That's fair. So I was just saying if you wanted to, this is the other option, is you write a check and say,

mom, I don't want this to come between us and destroy a relationship. Here's the freaking check to pay off the loans. Yeah. That's the other. I don't want to discus me off those because, yeah, because they've been, they freaking have had this for almost 20 years. Yes. The immaturity is on mom's side at this point. And dads for basically agreeing to pay it.

And I'm sure they are exhausted, but yes, it's that. It's been two decades, man. When your, when your 18 year old wants to go and take out $120,000, you say no. But no, they didn't. They said, yes, we will do this and take this on. And so they're the ones that have been dragging their feet. It's not his, it's not your fault. I mean, you know what I mean to that degree?

Because there was a deal. There was a deal that was made. Yeah. So I'm sorry. That's so frustrating. But I would. I mean, for the, for your, for your wife's sake, for your sake to like be in her presence and that passive aggressive comments constantly. Yeah. I would, yeah, I would be clear and draw a boundary there. But again, kind but clear. And there might be in between. Yeah. There might be a compromise where you go, hey, listen, here's how much I'm willing to chip in to just. And you're really trying to bail the parents out. But they're fine. If they were on food stamps, like, I get that.

No, they have the ability to. And so that's where I go, this is really between mom and dad because they have a disagreement. Yeah. Mom should be mad at dad, not the son. Because dad's been dragging his feet for 17 years. Can I remind you? No, they both have. Goodness gracious.

That's, see. And clearly, mom doesn't have a vote when it comes to finances. I feel like we're getting more and more of these. I don't know why. I feel like we hear more and more parents. Resentment guilt calls. To adult children with the student loan. debacle in the mix of someone said they were going to pay, they're not paying, or they're paying

and they're mad, but they're asking me for money again. This is the original deal. Yeah, I mean, it's just, it's so much. So can we talk about our parameters around family and money? I think it's a good reminder for everyone listening here, which is this, never loan money to family or friends. If you want to give money, make it a gift. And please don't go into debt for said gift. That's not really a gift. We've heard that with like, well, Mom got me a car, has a loan on it. And so I got to pay it. But she got me the car.

Right. Yes. And so it's fine if you want to get money. And if the giving ends up becoming a pattern of enabling bad behavior or irresponsibility, that's another stop. Right? We're not doing that. But the gets, because I mean, part of the show is about changing your family tree, right? Getting yourself in a position where you can change your life.

You change your family's life. You change others' lives. Like the ripple effect is beautiful and wonderful. And we want that to be. but we also want the people on the other side that are receiving it to be in a healthy good spot themselves to have their own dignity as adults. So that and then the other thing, George, no co-signing. Ever. Please, please, no co-signing.

We got a grandma who co-signed. That was last week on the show, I think. I know. She was like 92. And this guy's like, yeah, my grandma co-signed. I was like, poor grandmother. He's broke. He's probably not going to be able to make the payment.

Yeah, they require a co-signer because nobody trusts you to pay it off. Yes. What happens is you end up not paying it off and they go after poor grandma who thought you were going to make the payments perfectly. And she was just more of a, you know, more of just like a nice thing. I'll sign it, but I won't ever have to deal with it. Right, right. Never think that. It will destroy a relationship and cause resentment.

And so it's so much easier to just either put the boundary up and say no or give a one-time gift if it's going to be a blessing and you're not enabling. Not one time, though. You think just once for the rest of their life? Well, not like an ongoing, hey, I'm going to give you a thousand bucks every month forever. pattern, yes. You know what I mean? If you reward bad behavior, that's when it turns into entitlement. Agreed. I'm going to come back to Bank of Dad. Why would I go work harder? That's silly. This is The Ramsey Show. If you're looking for a more budget-friendly way to save on medical costs and stay true to your values, Christian health care ministries is a great option to think about.

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Get started at CHMinistries.org slash budgets and use promo code Ramsey. That's CHministries.org slash budget and promo code Ramsey. Matthew is in Denver up next. Matthew, welcome to the show. Hey, thanks for taking my call. How are y'all doing this afternoon? We're doing great. How can Rachel and I help?

So I just, I was going to get some advice. My wife and I are looking, taking a $100,000 loan from my father to buy an eight-unit rental property. And I just kind of wanted to see what you guys thought based on the details of the property and everything else. Yeah, let's hear it because not super excited about this. So now taking it alone, but from your father-in-law. Yeah, give me your numbers. What are you thinking? Okay, so I got a $900,000 property at 3% interest owner finance.

And so it's going to be $100,000 of my money, a $100,000 loan from my dad. And then the owner is willing to do $100,000 of in-kind money is what she calls it. And that includes repairs and improvements on the property for a person. period of 10 years. And then she's also willing to mentor my wife and I for two years, the first two years, that we own the home. And then at the end of the 10 years, it's going to be a balloon payment. And I know this kind of goes against a lot of the day brandy, I guess, principles. But I wanted to see what you guys thought, because I think it might be a good opportunity for us to kind of get a business and start moving that way.

Do you guys own a home currently, a primary home? Yes, we do own a home currently, and we have no debts or payments at all, besides that house. Oh, besides the house. What's left on that mortgage? $190,000. Okay, and what's your household income? We make around $135,000, and there's a lot of room for growth there. Cool. How did this idea come up of the eight unit and then your dad loaning you the money? Who brought it up?

So we met this woman at a graduation, and we had owned a single-family home, investment property, and we got to talking to her, and I kind of told her that we're real estate investors, and she's like, oh, well, I got a deal for you. My husband and I are trying to get out of this property because her husband is pretty sick, and they're just trying to move down to Arizona. And so that's kind of how this got brought up. And then she is the one that's kind of structured this deal. Sounds like it.

So she knows your dad and was like, well, if he ponies up 100, you pony up 100, we can make this work. And I'll mentor you for two years from Arizona. Yeah, she's kind of curtail related to my wife, not by blood or anything. Matthew, I just see 85 ways this could go sideways. It's not worth it. It's not. I mean, from the way the loan structured with the balloon happening in 10 years, all this borrowing from family, going into a $900,000 investment property that you don't have the money for. How much you all have state?

How much cash do you and your wife have? So I have $100,000 for the down, and then we have about $250,000 in the market. markets right now. Okay, why don't you, why do you have to borrow money from your dad? Take your money out if you're going to do the deal. I wouldn't do the deal, but don't, don't borrow money from your dad. You have $350,000. Okay, got it. And I don't know. I guess my thought is if I could keep it in the markets and make 10%, whereas I could pay my dad back 10% on the money that he loans the company. I mean, you're needing the stars to align with this. You need eight tenants who pay on time with no risk there. You need to pay dad back.

You need to make money in the markets. There are so many variables here that could go wrong. If all of this just tanks, you're screwed. Right? If the market tanks, you're screwed. Yeah. You can't find renters are screwed. If the market goes down, as Dave always says, if Trump burps and the market goes down.

I mean, what's going to? He was like, we're going to invade Greenland. The stock market got spooked. That's right. Yeah. And so you just don't know. I mean, yeah. But here's the parameters that are underlying.

I'd pick off your house, Matthew. Yeah, the underlying. principles are we never recommend you buy investment property until your primary home is paid off. Number two, we never recommend you borrow to invest in a rental property, always recommend paying cash. And number three, we always tell people never borrow money from family. And so there's a lot of principles here that are being violated all for the sake of a quote, unquote, good opportunity. And can I, I'm going to say this, Matthew, and I don't want it to be rude, but you guys had one single residential investment property, correct? You and your wife?

That is correct. And you tell this lady that your real estate investors, which I guess technically you are. You have one investment property. And I think she saw, ding, ding, ding, here's my ticket out. I got to get out of this horrible situation I'm in because my husband's sick. And again, I don't think it's like ill will on her end. I just think she thought, oh, my gosh, here's a guy who's probably doing all these like deals that you see on TikTok. And he's got eight VRBOs and here, you know what I mean?

And he'll do it. I bet I could offer him this and we'll structure the loan where it works for him so I can get out of here. That's what she saw. I mean, honestly, she didn't list it. She didn't go and go to some, you know, investment firm that has, you know, 18 different investors around the country that go and buy property. You know what I mean? Like, no, no, no. She found you and your wife and you thought you hit the, hit a great deal and you hit a horrible deal.

Not good. Not good. Okay. Okay. Thank you. I appreciate your advice. Not what you wanted to hear right now. Sorry, Matthew. So listen, what you and your wife did, though, with, I would pay off your house, but I'm all about, I think having investment properties is amazing. My husband and I do,

my family, I mean, I think it's, I think it is great. You just have to start slow. Like the first one Winston and I got, this was, gosh, probably 10 years ago. It was a short sale condo in this, like, kind of like, sketchy part of Nashville. But it's what, we did it, but we got a deal. We saved up. You know, we, we, bought it for really not a lot, had to go do a lot of work in it. We sold it probably, gosh, seven years later

when Nashville was on, and it was amazing. I was like, this is great, right? You have to start slow, start small. Don't start with a million dollar eight unit property because you're about to take on all those people. Like that's going to be a huge headache. Like get some things under your

belt, start small, and then start to work your way up, which is not as flashy, not as exciting, but it is it is peace. That is a peaceful way to do this and not create chaos because you guys are setting yourself up from chaos and maybe to ruin a relationship with your dad if this goes bad too. I've rarely seen it where they go, yeah, borrowed money from dad. It worked out perfectly. Paid him back and he was happy. I was happy. Usually it becomes, well, dad wants a piece of the pie now. He wants his money back because he needs to retire. That's it. Yes. Which means I need to sell

the property. Oh, and he wants appreciation. And so he wants that too on top of his 100,000, on top of interest, and it just always ruins family dynamics. And he gets sick, and he needs 100 grand back, you know, and I don't know. There's just a lot, a lot of things. So I would hold off and just go slow. And it's not exciting. It's not exciting, but it's worth it. What is the 250 invested for?

What is that earmarked for? What exactly do you mean about like, what am I saving that for? Yeah, you said you had $250,000 in the markets. I'm guessing that's not a retirement just in a brokerage account. Yeah, so it's a mix of IRAs and then just via personal brokerage account. And that's just saving for retirement is kind of what I've been doing and kind of learning to trade it on my own and with the help from a financial investor and stuff. Okay.

I was going to say, if you have liquid money that is really earmarked for nothing and you want to take it and throw it at the house, the non-retirement portion, you could do that and speed up the process. Free up a mortgage payment and then you can stack cash fast. And you guys are amazing savers. So then, yeah, stack up some cash and get 300 grand here. You know, like save that over the next five years or whatever your income is. And then go buy a rental property with cash.

And that's it. You know what I mean? Like you can do this slow walking it, but do it in the right order. Pay off the house. If you have the money, I would pay off your primary home. And, yeah, I'd stay away from this deal. The key is reducing risk. And right now we're just adding more and more and more risk.

And your first real investment property to be a $900,000, dollar eight unit just feels like we're biting off a lot here. Yes. I mean the purposes of helping this woman move right with her ailing husband. Yeah. I mean eight different families, eight different situation. I mean, that's a part-time job right there of what you just signed up for as a landlord. So there's not passive income. It's a lot of work, a lot of work. If you're working the baby steps, the best and fastest way to do it is by using every dollar. It's more than just our budgeting app. Now the plan is built right in. You can track your progress, plus get personal. recommendations and coaching for your situation that will help you free up more money and work the plan even faster.

It's like having one of us walking with you every day 24-7, showing you the next right step and holding you accountable. So start every dollar for free. You can download it in the app store or Google Play. Miriam is in New York City up next. Miriam, how can we help? Hi, it's a pleasure to speak to both of you. Thank you for taking my call. Sure.

My question is about life insurance. We pushed off getting life insurance way too long, and I thought it would pretty straightforward. I wanted to call that their insurance, and my husband knew two people who kept bugging him that they wanted to sell him life insurance. So I said, okay, we need a 20-year term. And I think we got a little screwed by them because we ended up getting a policy, which they said it was 20-year, but it's expendable 20-year. Oh. So after the 20 years, you can re-up at the current premiums for your age, which is going to be two to five times higher probably? Something like that, but I think when we got the package, which was after, you know, we have 30 days to cancel or whatever, but it's past the 30 days. Either way, I'm going to replace it. But it goes up even before the 20 years, I think. Like there's a whole chart. It's hard to understand. I'm not really sure.

Who did you get it through? What company? Northwestern. Oh, boy. Okay. You've said enough, Miriam. I would cancel yesterday. It's not a scam, and they're a company who does all kinds of financial products, but likely what happens. Here's what I've seen.

It's mostly young guys right out of college who want some sales experience, and they sell these scummiest life insurance products to unsuspecting victims, like their family and friends. Right. That's what I've seen. So I'm not talking about company. Yep, that's exactly what happens. But that's my brother.

Same thing happened to my own brother, right? Some guy from college reaches out, hey, man, how you doing? And so I would get out of this and I would contact our friends at Zander because they're not going to sell you extendable term life insurance. Term life insurance by definition. I did already reach out to Vendor. Okay. So I just wanted to know like basically, should I take 20 years? Should I take 30 year?

They said that Dave recommends a child rider, which I never heard on the show. Hold on, hold on. Northwestern said Dave recommends a child rider. No, no, no, no, no. Zander. For what reason? Oh, I don't know. I have four kids.

That's why. I never heard it from him. That's why I called because I want that to understand. And then somebody else, I'm getting very overwhelmed, but somebody else told me that we should really do a disability rider. No, there's a lot of riders. And when you hear the word writer, just think gimmick. And so all you need is term life insurance.

20 years should be enough. And here's how to think about it. In 20 years' time, you should be self-insured. If you follow the Ramsey plan, you become debt-free, stay debt-free, you have the emergency fund, you invest in retirement. for 20 years. You pay the house off in 15 years if you follow our parameters of a 15-year mortgage, and all of a sudden, you don't need the life insurance anymore once the term expires. So that's the goal. And if it needs, if you need 25 years to get there, they get 25.

Well, and that's what I'm asking. How do I, we're in Baby Step 3B. We live in New York, so that's taking a while. I have four kids, one on the way, and I'm not done. My husband and I are both from very large families. So I'm thinking, my kids are not going to be out of the house in 20 years. Should I go longer? Should I look for something in between to add? Yeah, I mean, you could see how much it is because are you guys in good health, would you say? Yes.

Okay. Because that's the great thing about term life is it is so inexpensive. And then when it comes up for time for renewal, you can always, you know, go back through and recheck things and make different decisions, right? You can always get additional policies, you know, in a few years. Now, it's going to be more expensive as you age. So your best bet, likely, and they can help you run the math, is going, hey, let's do a 25 year because it's going to end up being cheaper than doing a 20 now and a 5 later. And so I would confer with them, get the math on it, and always stick to term, no matter what.

Just term. And if it's 15, 20, 25, that's fine. And always get 10 to 12 times your annual income or your husband's annual income. And both of you should have your own individual policies. Yes. And you're saying not 30, 25 should, I shouldn't go more than that. than that. Thirty feels aggressive. If the kids are still in the house at that point, that's on them, and you guys will be multi-millionaires by that. Yeah, I was going to say, because I mean, yes. You'll be self-insured. In 25 years, yes, Merrim, if you guys are investing 15% of your income, if you guys are working to pay everything off, I'm like, it's just that continues to build. That's where you build wealth. And in 25 years, what that's going to end up being is a lot of money. And so for the kids that are in the home, maybe it's one or two of them, they're going to have plenty of money. The others should be out, live in their own lives.

and not needing your financial support. I mean, you'll have a village at that point to take care of each other. So I'm less worried 25 years from now about what life looks like if you follow the plan. Exactly. Okay. I can ask one more quick question? Sure. About when your income goes up, you're sort of 10 to 12 times your income.

So then do you buy another plan in term for the difference? You can get a small policy for the difference. I wouldn't cancel the one you currently have and get a new one. So you can always add small. Would you look at that? Like in a year, if it goes up, every few years, it's a parameter. So if you get a $5,000 raise, you don't need to go out and get an extra policy. Right.

But if you get a substantial raise and your lifestyles change and your expenses have changed dramatically, that's when you go, all right, we need to re-look at this. Yeah, it's about every four to five years I would re-look. And in the, you know, the kid's situation too changes it. I mean, for me. Exactly. So, yeah, but I'd say, yeah, every four to five years. I'm trying to think what wins tonight because we just re-upped our life insurance

maybe like two years ago or something. because we still get it. I don't know. I like having it, you know, even if we're debt-free and everything, there's a part of me that I'm like, eh, we're young and healthy and it's cheap. And that's a great thing about term. For what it costs, I mean, it's a great policy to have. Yeah.

We could have done it a long time ago. Yeah. Yeah. So, yeah, so anything fancy around it, any words you don't understand, Miriam, usually is like a, that's a red flag to me. They're adding things on. If it's a young guy that's in the situation and it's all these weird terms, again, that they're selling you this package,

probably not a great deal. Like the simpler, the better. Just a 20 year, 25 year. And they always want to prey on your emotions and the what ifs. And well, a good parent would do this. You really want to take care of your kids. And kids don't need life insurance. Only you, you know, I mean, all of it.

It's meant to do one thing, which is replace income. That's it. Yeah. Your two-year-old is not bringing, you know, money into the house here unless he's like a Gerber baby making bank. So you're asking really good questions, Miriam. And I love that you're taking. taking care of your family in this way.

Most people are going, what the heck are they talking about? I don't have any insurance. And so for everyone out there listening, you need term life insurance if anybody depends on you, a spouse or children. And it's very affordable. And you can call our friends at Zander and get this done today. 800, 356, 4282, or go to Xander.com. They'll take care of you.

Rachel and I both have our policies through Zander for our families. And it's well worth the money. And Zander's great because they go and shop. They're broker. Yeah, all different companies versus, again, like a North Western, right, to pick on them a little bit, but it's like, okay, it's just one or Affleck, it's just one, you know what I mean, I guess their car. I don't know if they do life. They probably do it all these days.

Yeah, probably. But yeah, it's not just the one company that you're getting the price from what Zander does. They shop all the companies to get you the best price of what you're looking. And a lot of these now have no medical exams. Like if you're under, I don't know, a million dollar policy. Oh, really? Yeah. You don't have to go get the medical exam or that's nice. So that's always nice. Not have to get. Convenient. Have someone come to the house and get your blood done or go somewhere and get the blood work done. I love it. And it's a good idea to get healthy before you shop for life insurance. Cut the bad habits.

Fast. Be thinking about your diet the night before your blood gets drawn. It's like cramming for a test. You're like, well, if I don't eat bad today. Fast and drink a lot of water. You're like Googling, how fast will my blood work be good if I cut sweets? I know. Yep. That's a good reminder. Yeah. And I think those are some of the saddest calls George of, you know, we'll get, you know, a widower or a widow. calling that their spouse passed away and they have kids and they're trying to pick up the pieces. You know, whether they're trying to find a new job or starting to work because they were a stay-at-home parent or trying to figure out child care for the kids so they can go to work.

I mean, it's just it. And if there is no life insurance, then they are, they have nothing. You know, they're stuck with what it is. And so it is. And the sad part is a lot of people think they're covered because they're like, well, he has one through work. And they go, well, how much is that policy? They go, it's $50,000. I was like, well, great. We can get by for maybe six to 12 months. Yeah. But what about after that? And so the goal here is if you make $50,000 and you get a $500,000 policy, you could invest that money and it would be able to spit off $50,000 with the average return in the market. And so that's the goal of getting 10 to 12 times your income is because the stock market historically has done about 10 to 12 percent. And so that's

the reason for life insurance. That's the mechanics of it. And it doesn't take long. I know it feels like, well, I'm going to die sooner if I get life insurance. No, you're going to die regardless. Maybe tomorrow, maybe in 50 years, but either way, you need to sleep better knowing that your family's protected. And our friends at Xander will hook you up. You spend hours researching before making a major purchase like a home or car, but it's also a good idea to put in the work searching for the right insurance coverage.

To protect your biggest assets, I recommend using Ramsey trusted pros. Whether you're looking for car, home, or any other type of insurance. Ramsey trusted providers have been coached and vetted to serve you like we would. Find what you need at Ramsey Solutions.com slash insurance. Welcome back to the Ramsey Show in the Fairwinds Credit Union Studio. I'm George Camel, joined by Ramsey personality, Rachel Cruz. We're taking your calls at AAA 825-5-225. Katie is in South Carolina up next.

Katie, what's going on? Hey, thank you guys so much for taking my call. I hope y'all are well. We are. What's going on with you today? How can we help? So, I mean, I might sound crazy for saying this, but I just can't shake the feeling that we're charging a little bit too much money. And I guess I'm looking for a way to justify my guilt or, you know, try and figure out how to process, you know, how fast do we want to grow and how should we scale our company. Okay, so we, is this your husband? Yeah, my husband started this business before we got married, and I kind of joined him after that. We've been in business for about 11 years.

Cool. What kind of business is it? It's a trucking company, so we do some hauling. Wow, that business has really taken off, hasn't it? Yeah, yeah. We've been married to you. So last year, we brought in $290,000 sales, and then after, you know, paying everyone and expenses, we profited about 120,000. And that's as a household. So that's your household income for the year? So that's not the household income. Most of that stayed in the business.

That was just what the business profited. We paid ourselves about $50,000. Oh, wow. And that's together. That's total that came to you guys. Wow. All right. Yep, correct. So where did this price hike come into play? And why? Yeah, so we, our pricing is very simple. We just match what the competition is around us. We don't have a lot of competitors. And, you know, we're one of the few people that do our specific type of hauling in our area. So we really have just always kind of matched what market price is. But I'm kind of looking at case by case, job by job, and realizing that the range of, of profit we have on each job is super wide. So sometimes it's, you know, a small amount of profit, but a lot of the time it's quite large. So I'm just kind of, you know, when I brought up the idea of restructuring how we do our pricing and, you know, taking it from super simple to trying to be a little bit more specific so we can afford to help some people that usually

say, oh, no, you're too expensive. Well, you know, if you're willing to make 40% profit on job instead of 60 maybe that person would have said yes. Because you feel like you need more business? Do you feel like you need more business? Well, so our work is very seasonal. The demand in season is so high. We can't keep up with it. But then during the off season, it's not really a thing.

So we, you know, we obviously sew down a lot and that's, we're blessed that, you know, able to work very full time, overtime six months out of the years enough for us to live off of and then the rest of the time we can work on side gigs or spending more time with family, which is great. So yes and no, we definitely don't need more work. We can't handle it in the summer, but the idea is obviously to grow so we can do even more during the summer, if that makes sense. Got it. So is there a moral profit margin in your mind that it's like anything above this? It's immoral to charge. Well, I don't have a specific number. It's more the concept of,

You know, is that even a valid question? Well, I mean, if you look at prices, is his reasoning, hey, everything's gone up. Everything costs us more. Fuel, insurance, maintenance, tires, labor permits. Like, that's all gone up. And so it's not like he's tripling the cost just for fun. And you guys are bringing home 50 grand as a household. And it's a specific type of service that you said.

There's not a lot of competition. And there's high demand. Yeah. And not a lot of supply. Which means you can charge more. and it's not like you're hurting anybody. They're happily paying you for this service that they can't do themselves. Yes, the more I say it out loud, the more I know I'm kind of making my husband

sound like a superstar in business. But, you know, I just always back to, I always go back to the few cases where people have asked us for help and, you know, we give them our price and they're like, oh, you know, that's way over budget. And in my head, I'm saying, I really know I could have helped this person out. I could have met their needs. Sure. And I, you know, I chose not to because I wanted to keep that profit high.

Yeah, I hear you. So I wonder if, because, you know, even here at Ramsey, for instance, like, we give stuff away a lot, whether it's tickets to a live event, books, you know, and some stuff, it's like very nice coaching, you know, one-on-one coaching that will pay for people's sessions. Like, we will have life with an open hands business-wise, but we're only able to do that because we are making it. profit on the other end that is feeding a thousand people that work here and their families and all of it right so so there there is room to be if there is room to be generous i would talk to your husband about that and say hey you know and i hate to me this sounds so like legalistic and i don't mean to be this like formulaic about it but i don't know okay i'm just thinking like four different situations you know throughout the summer when you guys are in high demand and

people like we need you but i can't afford that pricing you know are there four times that you can say and you guys agree on that. Okay, I just feel something in my spirit that I'm supposed to extend some grace to them and help them. Yeah. And so that way you're at least in the practice of doing that when you feel led,

but it's not changing the whole structure of the company because I don't feel like you guys are doing something wrong or immoral to George's point. And, you know, you're, you know, you guys are bringing home 50K a year out of this thing. We're far from being greedy here. Yeah, yeah, yeah. It's not like you're making, you know, five million.

and you're like, oh my gosh, I feel like we're overcharging everyone. Most of your customers are making more than you. And so that's the other thing to think about here is you guys also need to put food on the table and you have financial goals. And there's nothing wrong or immoral about making money. Have you screwed anyone over? Have you lied? Have you cheated? Right.

No, yeah. Absolutely not. And so it's okay to say this is what our service is worth and we're going to charge it. And if you can't afford it, that's not a slight on them. It's just saying, hey, you need to go somewhere else that you can afford. And so I can't. I can't get everything that I want. There's things that I can't afford.

And I don't expect that business to go, well, can you just bring the budget down for me? This is not a charity. If you want to start a charity, go for it. You can open a nonprofit and do all kinds of charitable giving through that. I wonder, could she kind of like scratched the hitch a little bit within it, right? I like your idea of saying, hey, there's going to be a customer that comes our way that I just, my heart grieves for them and I want to help them. And that's totally great to say, we want to be generous to this many customers a year or when it comes up, we're going to give some people a break. but I don't think you also need to go, well, whatever your budget is, we'll try to meet that, because that's how you go out of business.

Yeah, I mean, any industry, Katie, there's going to be people that can't afford. You know what I mean? I'm like, I was just thinking about, I don't know, that's why I thought social media. I'm like people that, you know, need help with social media. There's people that do that as a job that charge insane money because they're really good at it or people that are starting out and don't charge much. And I, you know, you couldn't afford, you know, the high ends. That's okay. It's a service they provide. and just because they charge a lot, you know, doesn't make them a bad person.

It means they're probably really good at their job or they found this niche area of life, which is what you guys have done. So nothing bad. But I would say lean into when you can. And it's not the whole business bottle. But if there's moments to say, hey, I want to be generous in this instance. You and your husband get on the same page with that. And maybe that'll kind of help free up your spirit some in that generosity.

Think about this way. If you guys charge more and you make more that gives you the freedom to be more generous when the time comes without it being a loss for you. And so I think there's nothing wrong with that. And listen, if you charge too much, you'll go out of business eventually. And so you'll know when the price is right, when you have the right amount of supply and demand happening. And so I'm, I don't think anyone's right or wrong here. I think we need to meet in the middle and understand you want to be generous and he needs to pay the bills. Both of you are right. Hey guys, I've got big news. The Ramsey show is going on tour. And this is your

chance to be more than just a listener. You get to be part of the show. So hear questions ask live and experience the kind of momentum that only comes from being in the room. We'll be in Charlotte, Denver, Phoenix, and Anaheim with a limited number of seats in each city. So last fall, we completely sold out in 72 hours. So do not wait. Get your tickets at ramsysolutions.com slash events or by clicking the link in the show notes. CJ's in Phoenix up next. Welcome to the Ramsey show, CJ. How can we help?

Yes, how ya doing? Thank you for hosting me. I wanted to get your input in ways to get out of my debt with the credit cards, student loans, and a card loan. And my house payments, I think when I first got the house, I was making a certain amount of money. and I thought it was a good idea to get this two-story house. But per paycheck, it's been the house payments, what I pay to escrow.

It's a whole check. So it's half your income? Half my income, yes, sir. Your take-on pay, okay. My take-home pay, yes. I make before taxes about $103,000. Okay. Are you single?

I'm married. Married. Okay. Is your spouse? Okay. Spouse working outside of the home or at home? She, we just, she just had a baby, so she's not working currently. Congrats.

That's exciting. Thank you. Okay. What's your total debt? My total debt with the house payment, I want to say... Not including the mortgage. Just give us the consumer debt. You said car loan, credit card, student loans.

About 110,000. Who! How much is the car loan? The car loan is only 5,000. The bigger one is the credit cards and the student loans. What do those break out to be? How much are the student loans? The student loan is about 40,000 on the government one and 5,000 a Texas loan.

I think that's the private one. Okay. And the credit card comes out to be altogether about 60,000. 60,000. How many credit cards do you have? It's five. Between five, it's the $60,000. Okay.

Well, what did the 60K get spent on in the credit cards? And over what period of time was this? It's been over the last, I want to say it, about a year and a half, where once I got the clinical coordinator position, not that the pay, I came home as a full-time nurse and to get this position and I was doing a travel assignment so I was getting paid more. So that's how I thought in my mind that I was just going to stay together. I mean, for a good amount of time traveling, but we had our first kid and I was, you know, off of home.

So your income went down, but your spending stayed high. The lifestyle creep never went away. And so you were just spending on the cards. So the house payment was taking, you know, the one payment and to, you know, as a thing of stuff. Speak directly in your phones, E.J. We're having a hard time hearing you. Oh, sorry.

Okay. So once the house pay, once I came full time and the house payment was half of, you know, half of one check per month, that's when I was. you know, I'll put it on the card and hopefully I'll, you know, be able to pay it. And it was just... You're putting the mortgage on the card. Not the mortgage. It was just everything else was on the card.

Okay. Yes, ma'am. Oh, because you spent one full paycheck on the mortgage and then anything else lifestyle just went on the card. Yes, ma'am. Okay. Are you and your wife ready to have a very different life? Yes, sir.

We talked about it and we always listen to the show and we always just talk about we need to do better. And with the credit cards, most of them are through Chase Bank. And I did call to tell them that I can't pay anymore. So they put me on the plan. But even with that is about just Chase alone is about $1,200 that I'm paying. Okay, with everything, CJ, with you're paid twice a month, with the mortgage, the credit card bills, your regular utilities, I mean, everything. I I'm assuming you're coming up short every month if you stayed current with all of your debt. I do come short. I did pick up this year I did pick up a home health job, which usually it's about $400 or $500 more per month.

And that gives me the ability like that $500 to pay. That's what you need to keep your head above water. But that's it, though. There's nothing extra to be throwing out this debt to get out of it. That's just to pay the mental payments. Yes, ma'am. And that's just month to month. And, you know, it's...

How many hours are you doing that extra job? That's per patient. Okay. Right now, I have about three, four patients. Sometimes I'll tell them my days off, and they'll try to give me, you know, PRN jobs to just go see a patient. But they don't come often. It's just... It's not reliable.

Yeah. So, I mean, that's a good thing to have because I feel like it pays well, but I would have another side hustle because, yeah, C.J, it's something, it's, It's got a ship from the income perspective. I think you guys need to cut your lifestyle if you haven't already. Yeah, no eating out, no investing, no saving. All we're doing is trying to pay down the smallest debt. So take that smallest credit card that you have and we're going to knock that out. Or if it's the car loan, that's the smallest debt or the student loan.

We're knocking that balance out first and make minimums on the rest. So we're going to try to stay current on all the bills and throw extra at the smallest debt we have. That's called the debt snowball method. Which will either be that $5,000 private student loan. or your $5,000 car, or if there's a credit card smaller than $5,000, you're going to attack that first. Okay.

Is there anything you could sell to come up with some cash to speed this up? Everything else, I've looked, and it would just be just minimal stuff, shoes, but, you know, it's minimal. What is the car worth? You said you 05 on it. What is it worth?

It's worth about $3,000. Oh. It's a Jeep, but the miles, I have, I think, out it's about 155,000 miles on it. How long ago did your wife have the baby? A couple months ago. Okay.

You know, I would have a goal for you guys, because again, $500 a month shifts. You know, you guys, it's so helpful. So I'm thinking for her, what could she do from home to make $500 a month? And that could include selling stuff. She could make a part-time job of selling your shoes, CJ, making some money. You know, but for real, like, what can she do? And she doesn't have to start today. But maybe you guys look up and say, okay, you're going to start working CJ extra.

You're cutting lifestyle. And then we're going to look up and, I don't know what I'm making this up. June, she's going to start doing something through the end of the year, bringing home an extra $500 to $1,000. Like I think as much income as you guys can get in, rolling in, which is going to be exhausting. It's going to be so hard. It's so frustrating. But that's going to make you guys get out of debt that much faster because it's not fun, right, during this process of sacrifice. But you guys either have to do it really intensely and just go all in or you kind of just dabble around the edges and you guys will keep it around for another four to five years.

Because here's the truth. If we continue at this pace and you can only throw 100 or 200 bucks of this debt, you're going to be in debt for the rest of your life. And so that's why we're saying six-figure debt. you need a massive six-figure income to pay this off in a reasonable amount of time. Two, three, four years. That's the goal here of intense sacrifice, not 20 years of just trying to make our way through and make the minimum payments while the interest racks up. So that's why we want you to have a sense of urgency to get this income up. And you've got a lot of skills that are very valuable. And so if you can go make $150,000, $200,000, and she makes another $50,000, even if the kids

are in daycare for a season, they will survive. The goal is for you guys to get above water here. Okay. So getting our income up. That's the key. Getting expenses down as much as we can, but even then, your income has to go up in order to knock this out quickly. Yes, sir. So hang on the line, CJ. I'm going to send you a copy of my book, Breaking Free from Broke, along with every dollar. That's our budgeting tool. And you and your wife tonight, you're going to lay out, here's our next paychecks, here's all of our expenses, here's our plan to make the most of every dollar. Yeah. And we always caution against moving. I mean, honestly, because it's such. such a big expense.

It's like one of the biggest things to uproot your family out of a home. But I would consider it's half of your income. And unless your main job, you're going to see significant raises in the next one, two, three years. If there's not, and it's looking pretty plateau, I mean, golly, that's an extra $2,000 if you get it under that to that 24, that 25%. That's an extra $2,000 a month that you're, you know, that you could save. if you guys changed your housing situation, which I know is, that's a big ask.

But it changes the whole timeline. It does. And you guys can become homeowners again once we're not broke. But right now, with that 50% mortgage is, it's eating your lunch and hurting your ability to pay down the debt. So hang on the line, CJ. We're going to get you those resources. We're wishing you guys the best with this debt payoff. Hey, guys, Dave Ramsey here.

Every day on this show, we help people work through real money problems and figure out what to do next. Now, you can get that same kind of help anytime. with Ask Ramsey. Ask your money question and get answers built on Ramsey principles we use on the show. Whether you're making a decision or just want something explained, Ask Ramsey is here to help. It's fast, simple, and free to use. Go to Ramsey Solutions.com and try Ask Ramsey today. That's ramsysolutions.com. The Ramsey Show Question of the Day is brought to you by YREFI. You don't have to stay stuck and defaulted private student loans forever. YREFI helps borrowers take back control with affordable refinancing options that actually

work. Learn more at YREFI.com slash Ramsey. That's YR-E-F-Y dot com slash Ramsey, not available in all states. Today's question comes from Lucy in Oregon. She said, I'm concerned about being a target of deed fraud if we pay off our mortgage. If we keep our current mortgage, the bank would have to notify us if someone tried to take out a second mortgage to steal our equity. We're both in our 70s. I am retired and my husband plans to retire soon. The balance on the mortgage is $48,000 and we have the funds to take out of our 401k

to pay it off. What should we do? Wow. Okay. Well, I mean, deed fraud, it does exist, but I'm not going to be so paranoid that I keep my mortgage to do it. Right. Because you can always, you know, if God forbid that happened. It's not super common. More when you're like, you know, buying homes, I get sure the deed's, you know, good. And I don't know. There's something you can do. We bought a home recently. We got owner's title insurance, which protects you against that. Yes. So if you're worried about it, I would look into one of those policies. Yeah, to do that. And you can sign up with your county and get deed alerts as well.

So that's also one way to protect against it. Yeah. And you can also, you know, if it did happen, God forbid, you're not going to be on the line for it because it's fraud. And so you can go through the bank and, you know, maybe some, I don't know, lawsuits. But at the end of the day, you're not going to have to owe it because it's fraud at that point. Yeah. So I wouldn't be so worried that I avoid paying my house off. That's wild. You're in your 70s.

There's a much more risk with this mortgage hanging around than there is that you guys experience deed fraud. Yeah. So I wouldn't worry about that. I would just pay it off and do your due diligence to stay protected. You know, freeze your credit. check the records with your county regularly, get the owner title insurance if you can, all of that good stuff. But it's a good question, and it's a valid concern.

So thank you for that. Alan is in Colorado up next. What's going on, Alan? Thank you for taking my call. I have a question about a 529 account that my wife and I have for our son. When he is finished with college, which is just a couple years down the road, there will be approximately $120,000 left in a 529 account. Oh, wow.

Way to go. I haven't. Yeah, yeah, it's pretty strong. I have an opinion of what to do with it, but I was just curious to get you all's take. How old is the 529? When did you open it? Oh, boy. Our son is 20, let's say, 20 years ago. Oh, great. I was going to say there's the, with the new Secure 2.0 Act, you can roll over up to 35 grand if it's been open for 15 years. You know, you can use that periodically. You can't do all 35 at one. but up to the Roth IRA limit, you can start funding that.

So that's one option. Yeah, do you have other kids, Alan? No, we don't. You don't? Okay, it's just this. Yeah. Well, if you do that, you know, that's 35 out. So you got about, what, 85 or so, 95 left?

You said you had a plan already. I'm curious as to what you wanted to do. So my thought is, is keep it. Keep the 539. We're the guardian of it. Put it in his name. He's an adult now. But don't let him touch it. Just have it be there, so it's generational. You know, when his kids are ready to go to college, that's going to be a pretty large sum. When his kids get ready to go to college, it'll be astronomical. It's something that you could really just leave.

That's true. A lot of people don't think about that. It becomes like an endowment, basically, for your own family, generational wealth, that no one ever goes into debt for education. And that's personally what I'm doing. A lot of people go, well, I don't want to over it. overfund it because what if they don't go to college? And I go, if I overfund it, they're going to love old great, great grandpa George for setting up this 529 many moons ago. And can I do some math for you? Your kid is 20, right? He's 20. So let's say he has a kid at what, 25. Is that fair? It's optimistic, but sure. Okay. Should we go 30? Is that more realistic? Go 30. Plus 18 years. That kid then grows up. Yeah, so your son will be 48 when your grandson,

granddaughter, goes to college theoretically. How much would be in the account? So from 20 to 48, if you just left, let's say, 90 grand in there, right? Didn't do anything. You never contribute another dime. You'd have $1.4 million when he's 48. I hope that's enough to cover college at that point. And something, too, I was thinking,

even if his kids don't want to go or do go and there's extra, at 65, correct me if I'm wrong, you can start using that for his own retirement with no penalties. Yeah, there's a lot of stipulations with the 529. And even if he used it in before then, you know, he'd pay the 10% penalty. But other than that, it's not like wasted money. Yeah, you'll pay some. Yeah.

It's just thrown down the toilet. So I think you're being very wise with this. And I love the idea of creating generational wealth. And a lot of people don't realize the definition of beneficiary family is pretty loose. And so siblings, nieces, nephews, future. your kids, yourself, your spouse, a grandchild. There's so many options here that you could bless someone with in your family. Agreed. That's right. So let's say you got a brother and they're like, hey, they didn't prepare, but the kid doesn't deserve to go into crippling debt just because of that.

I'd love to transfer this to them. You can change beneficiaries at any time. At that point, yeah. Yeah, there's a lot of ways you can go with it. Yes, for sure. Well done, Alan. That's usually not, It's usually the opposite problem that we talk to people about. It's like a parent plus loan. This is the exact opposite. So I'm curious, how much money did it cost for your kid to go through school? So first off, something else, too, we owe it to Dave Ramsey from like 2005. You all have been a blessing to both my wife and I so much further.

We actually taught many, many, many, FPU classes. Thank you. So, yeah, you're welcome, you're welcome. So this 529 account, we actually showed him how compounding interest works. We stopped investing in the 529 when he was a freshman in college at 150. That's about where it was at. He's gone through three years of school, and it's at 159. Wow.

So you're telling me that it was growing faster than you were withdrawing. That's what I'm telling you. That's incredible. That's amazing. And it sounds like he went to a reasonably priced school and maybe even got some other scholarships. Well, a few scholarships. He was in, you know, he was in Albert Einstein, but he did okay. And yeah, it was a state school, so 20, 22, $23,000.

Totally. That's incredible. Yeah. That's the dream, Alan. Well done. Well done. Way to go. Just applaud you.

I mean, honestly, that is. If you're in the family tree of Allen, you should be thankful right now. That's pretty awesome. Thank you for the call. That's a cool kind of case study and what actually. happens when you do it right. Yes. And so I always recommend get started early on that 529, even if it's 100 bucks, 200 bucks, 300, 400, 500, now you're talking six figures in there by the time they're 18. For sure. And the college conversation, I feel like has been around a little bit

changing, right? That college is changing. We don't know what it's going to look like. Are we all going to be YouTubers and AI is going to do all the work for us? Yeah, that's right. Like, we don't know. But just remember, it's not stuck in there. To your point, it's not like you're, you know, it's an insane amount. If you were to pull it, just say like, God forbid, you're like, listen, we don't, we don't need this at all, but we need the cash. So we're going to take the penalty. Okay. So then you do that, right? And you pay some of the penalty, but then you have your cash. It's not like you lose it completely. Absolutely. And people ask, well, what if I want to invest for my kid for something else other than school? I say, great, do the 529. Don't trade those

dollars for investing over here. If you want to invest on top of that, you can just open a brokerage account in your name, a non-retirement account, and put money in there. I'm not a fan of putting the accounts in your kids' names because they legally then have access with the, you know, the UGMA or UTMA. At 18, this kid might have 120 grand that's legally theirs. That's frightening. I don't know if you know or any 18-year-olds. Most of them cannot be trusted with a $120,000 pile of money. Most adults can't be trusted with that.

And so I like the idea of me being able to control how much to give to that child for a, you know, a wedding or a down payment or a car, whatever. whatever it is to help them get a leg up. Yeah, delayed gratification for a 45-year-old, 50-year-old. It's probably a little bit more embedded than an 18-year-old. Yes. They need to mature. Their prefrontal cortex is not yet fully there. So that's personally what I'm doing for my kids.

I got the 529s for each of them, and I've got the brokerage accounts. So they'll be very thankful one day when homes are $4 million. And your grandkids. And my grandkids. Great, great-great-great-uncle George. That's so weird to think about. But I think Grandpa George, I'm going to settle into that. I love it.

I'm going to be cranky, senile. You're going to be like George Banks on, like Steve Martin on Father of the Bride. Oh, that's a good one. I thought you were going George Bailey. A lot of good George's out there in movies. Oh, it's a wonderful life. That's a good one, too. Our scripture of the day, Luke 1411, for all those who exalt themselves will be humbled.

And those who humble themselves will be exalted. C.S. Lewis said humility is not thinking less of yourself, but thinking of yourself less. poetry right there. That's good. Great quote. All right. Let's go out to Dave in Denver. What's going on, Dave? Hey, guys. Thanks for having me. I'm a loan officer for mortgages.

My question is, I often get clients and they come to me needing a mortgage. Most often it's older clients in this situation. And one spouse has passed away. I have access to their assets or see what they have, and it's a vulnerable situation. And really, they don't need a mortgage. What they need to do is sell some of their assets to get a home to downsize. I'm just looking for advice on how to bridge that gap with that and how to properly communicate that to them.

So you see this going to a dangerous place and you're like, how do I help these people when my job is to lend them the money that they're approved for? Yeah, and it's not overly dangerous sometimes, but like, you know, they have one spouse, maybe not have to have their job. whole life collecting these assets. And so when I come on, I say, hey, maybe you should look at selling somebody. That's kind of a, you know, my husband or whoever put all this together, this whole life, who are you to tell me to sell this? Yeah, you feel like, hey, that's outside the boundaries of my job. But it's like your heart is aching for them to be like, hey, you really need to go do these things. Yeah, so I'm looking for words of wisdom on how to appropriately navigate that. Well, I think you have the right heart. That's the most important

part is your motive and your spirit and the tone in which you deliver this. But I think just starting with, hey, I want to make sure this house fits your life, not just your approval amount. And as I'm seeing it here, I can see the assets over here. I can see what the mortgage payment's going to be. I think things are going to be tight unless you make some moves, make some sacrifices here. And you could offer, hey, one recommendation you could pursue is selling these assets, which could do XYZ. Yeah, yeah. And then it's just, it's not you telling what they have to do. It's just saying, I treat people how I want to be treated, and I can see all of your information here, and this is what I'm seeing. Yeah, and it's kind of a, you know, for them, take it or leave it kind of thing, but it's almost for your conscious, you know, you're like, man, I see this, and I just want to say it out loud.

But at the end of the day, they're going to be the ones, you know, making the decision. And if they don't take that advice and they do something else, that's okay. That's, you know, they're adults, and they can do that. At least you're sleeping well at night. Yeah. You said your peace. Oh, yeah, absolutely. I'm just trying to find how I sprayed the Dave Ramsey throughout my entire career.

Yeah, love it. I love it. It's hard because you want to like, well, Dave says, but you can't do that. It's not going to work. And instead, you sort of get to the root of it. You say, hey, the families that I see thrive when it comes to buying a home, they have margin outside of their mortgage payment to live and to save and to have fun and go on vacations. And right now what I'm seeing with your payment, it's going to be a lot of your income taken up by this payment.

And so you can go, hey, here's the approval amount. But here would be a, let's run the numbers and see what would be a comfortable amount. And then you can kind of get to the principles without saying, well, Dave recommends 25% of your take home pay on a 15-year fixed rate mortgage. You know, they get to choose the wisdom at that point. Yeah, Big Dave. I'm Little Dave, that's Big Dave. Little Dave, Big Dave. I like it.

That's true. And you know what, Dave, I mean, honestly, it would be so impressive and it would actually garner a lot of trust, I would think, from the people you're working for. In some situations, I'm assuming, you know, you're asking for them to pay less for a home, you know, and that's money out of your pocket too, right? If they choose that option. Less origination fee, less commission, all of them. Yeah, I mean, all of it. So there's something, I don't know, really trustworthy for you to say because you're not, you're not doing it the other way to be like, hey, you should spend more here with me so I can make more. In some of these cases, it's the opposite. And so they shouldn't be offended by that, right? There's, I mean, yeah, there's, I don't know, a lot of kindness in you even doing that. Yeah.

Well, thank you. Absolutely. Thanks for actually being, you know, serving well and serving your customer as well and being one of the good guys in the mortgage world. That's fantastic. Rachel, I've got a friend in the mortgage world and he, knowing what I do, he's like, dude, you would not believe the debt to income ratios people show up with. You're like, this is bonkers. Like, no one should be giving them this loan. And sadly, a lot of the banks, you run it through the computer, and it goes, yep, give them the loan.

That's fine. Yep, yep. We'll just do it. And the bank doesn't always care about the reality of your financial situation. Which is wild, because that's part of what got us into the biggest housing disaster in 0-8 is because of that kind of stuff, too. Lending people money. Giving it not like candy. I know.

Keep on doing it, though. Oh, my gosh. All right. Let's go out to Brian in Alaska. Brian, what's up? Hi, can you hear me? Yes. Loud and clear.

Okay, sweet. So I am in an interesting situation where I actually live in my dad's second home or my parents' second home here in Alaska while my family lives out of state. And I'm curious, I feel like I'm getting a smoking good deal on rent here. I just rent a room, but it's way cheaper than I can rent anything else in the area. How long should I stay here, saving up for a house? how long should I let this good deal ride as long as they're willing to give it to me? Yeah, that's a good question. How old are you?

I'm 28. 28, okay. Are you married? Nope, single. Okay. Any debt? Consumer debt? I owe $12,000 on an airplane.

That's in like a leasing company that I own. Okay. $12,000. And that, is that it? No credit card. Or a car loans? Nope. Okay, great.

And how much? Credit card. And how much do you make a year? Last year. So I started a new job last year. I had six months. I made about $55,000. And then this year for the whole year, I guess it's about $120 to $140.

Good for you. Okay. And how much money do you have saved? I currently only have like $3,000 saved. Okay. How long have you been living at this, your dad's place? So I've been living here about three years. I actually used to on half of it, and then I sold out my half to my stepmom.

That paid off a lot of my debt and was able to give me a down payment for this airplane that I lease out. Okay, so this airplane, is this a business you have where you basically rent out the airplane? Yep. Okay. What do you make from that? Is that on top of your 140? That's completely separate. So I make about $40 an hour every time it flies. And right now it's pretty much just all going back into the business for improvements for the airplane.

Got it. I'm paying the principal for, I get a loan from a friend of mine, which basically zero interest, that I pay the principal out of my personal funds. and then what the airplane makes just kind of get circulated back into making improvements for the airplane. Okay, gotcha. Okay, so, yeah, the whole living, you know,

with parents or on their property or whatever, you know, for a period of time, I'm totally fine with it. I think after a while, there needs to be a point that you, you know, go and you're on your own, and you're living, you know, on your own, doing your own thing.

So what worries me is, and I know you just got this job six months ago, you said, so I'm not going to harp on it too much, but you've had a you know you said i'm getting a great deal all this but you only got three thousand dollars saved so there's a part of me that's like you know if people have this idea i'm going to go live really cheaply at my parents but then they don't take what they would have paid and rent or more of what they're saving and actually save it you know they end up spending it on restaurants and going on trips and stuff and so then it ends up being this point of like okay you weren't

using it actually to benefit yourself or to get you further financially you were just using it for lifestyle in the moment. So if you're doing this, I want you to be really, really disciplined and you make a great income. And so honestly, Brian, I mean, you're a single guy. You're living in Alaska and basically no rent. If you could live on, I don't know, 40 grand a year or something crazy, like you could bank so much money, not only pay off this airplane, but you could have six figures saved up, you know, by the end of the year, maybe into a little into 27. Really quickly. And I would, I would that for a down payment on a home because as soon as you can get something in your name building equity, that's the best route for you, Brian. So I'm okay with it for a little bit, maybe a year or two,

but I would be so disciplined in that to actually put that money in that savings towards your future and a future home for yourself. I would just say, hey, Dad, I'm going to be out on my 30th birthday. And that's the plan. And you go, I'm going to save up like a madman until then. I'm going to live off $1,500 or $1,500 a month. And the other $6, $7,000 is going to go into savings for that house. build for your own future and independence, and you will not regret it. That puts this hour of the Ramsey Show in the books. Remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.