The Ramsey Show - Build Habits That Build Wealth

Starting point is 00:00:02 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 Jay Worshaw, and we are going to be answering your questions. So give us a call at AAA 825-225. Starting us off is Robbie in Oklahoma City.

Starting point is 00:00:41 Hi, Robbie. Welcome to the show. Hey, thank you so much for having me. Really appreciate it. You know, I appreciate you, giving me the time to kind of run some things by you. Yeah, absolutely. Yeah, so currently I'm running into some issues from a budgetary standpoint. point, just, you know, it really comes down to budget discipline at the end of the day with my wife. It's been a constant pain point for us throughout our marriage. We've been, you know,

Starting point is 00:01:14 married over 10 years, got several kids. And while I would say that we're not necessarily in a difficult position financially, the budget just keeps getting blown up, meaning, you know, we have really, you know, high, you know, important priority things that we're putting money towards and that money gets spent on other things. Okay. In particular, we were putting our kids through private school and, you know, that's, you know, to the tune of about $2,000 a month to do that for us. And, you know, the money that we set aside for that ends up getting repurposed for

Starting point is 00:01:56 more material things. Wow. And so we've gone through counseling. We've had many sit downs over the years. And we just kind of go through this crazy cycle, you know, where we feel like we're on the same page. And then, you know, here we are again dealing with the same issues. And so I'm basically a point where I'm not sure what to do next. Hence, you know, kind of turning to you all to get some wisdom, hopefully.

Starting point is 00:02:27 How much? I'm just curious to know how much margin you guys have in your budget, or is it pretty tight? Like with private school, is it down to the wire and there's not much more room to do anything else? So I would say we have the margin if we're disciplined. How much margin? Yeah, I would say we have about an additional $2,000 a month that you have wiggle room there. But, you know, that's getting eaten up. Okay.

Starting point is 00:03:00 So what is she, what is she spending the money on? Furniture, decor, clothes, you know, vendors for parties that she likes to throw. It's a lot of stuff. But I mean, those would be the higher spend. Do you guys have categories in the budget now for clothing, hosting? You know what I mean? like the things that she enjoys to do, is there any money allotted to those things in the budget? You know, that's a fair question.

Starting point is 00:03:35 So to take a step back, you know, my income is designated for all necessary expenditures, you know, mortgage, utilities, like everything that is necessary. and then also goes towards building our retirement and savings. And what she brings to the table is basically everything else. So that would be contributed to, you know, private education. So she nets around $60,000 a year. Are you guys operating out of one account? No, multiple. But the funds are shared?

Starting point is 00:04:18 Is it like a shared situation? and it's just easier for your brain to think of it like that. Because it is kind of strange that you're... I don't like the separation. I like it's like the ideal would be, yeah, we have this much in our housing, this much, this much. And regardless of whose dollars it's being pulled from, we're all functioning out of one account, if that makes sense. Yeah. Yeah, she net 60.

Starting point is 00:04:41 What do you net? 250. Okay. And can I just ask? Because I don't want to make any assumptions. What percentage are you investing every single month for retirement? What's the percentage number or percentage amount? Yeah, so that's a good question.

Starting point is 00:04:58 The percentage, I'm a little fuzzy on that. I put about 750 in my 401k every month. No, no, no, monthly. So I get paid by weekly. And then that gets matched by my company. Okay. And you said, you net 250,000 a year?

Starting point is 00:05:21 Correct. And she's at 60. So you guys are a 310 household. And you're only putting in 750 a month? 750 a month. And then I put in another, so the 4-1K side, I put in some into a brokerage account separately. So let me get to my point. My point is I want to make sure that your ratios are correct.

Starting point is 00:05:46 So we actually see the margin here. because if you're telling me making $310,000 a year and you're paying $2K a month for private school, that's not crazy. That's less than daycare in some circumstances. And there's only $2,000 left a month. I have a head scratch moment on that. So because my point is if you're on my side, where's the money? On my side, I'm sorry. I should have been more clear. On my side, I'm. And that's the problem. Okay. So, Robbie, so I don't have visibility. So here's what I would say. say, Robbie. And I wish she was on the phone because I know there's two sides to every story in this. And it's obviously been an issue because you guys have been to counseling for it and all of it. So on one end of the spectrum, she's a shopaholic. She has an issue. She can't stop herself. It's compulsive. It is it's an addiction, right? Like that's one side. The other side is that you guys are on completely separate pages. You really don't know what's going on. She actually

Starting point is 00:06:43 has the ability to spend a little bit of money every month. And to you, your friend, freaking out because everything is designated in this weird separate. Well, she can only spend off of her paycheck margin. Of her paycheck and it's all separate. It's just, it's a little strange. So if the middle grounds, I may be leaning more to the ladder for a second. So what I would want, what I would suggest, you called us, I would sit down with her and I would say, we make X amount a month, regardless of who brings it in. This is what we have per month. Now out of what we have per month, we are going to go down a detailed budget. And we're going to talk about how much do you need for groceries?

Starting point is 00:07:23 Because if she's the grocery shopper, she's going to know. If you haven't set foot in a grocery store in five years, you're not going to know. So she's going to know. This is how much we need for groceries. This is how much we X, Y, and Z, and you go down the list. And she has a clothing line item. All of this. Because you guys are not, you're not, you don't have a ton of consumer debt, I'm assuming.

Starting point is 00:07:42 No, we don't owe on any of our vehicles. Okay. Yeah. The only thing we really owe on is our mortgage. I mean, my wife has one $5,000, like, personal, you know, loan that she took. Just she's a realtor and took it out for some reasons that. Okay, so I would have an issue. Yeah.

Starting point is 00:08:03 So I think you guys, Robbie, y'all are all over the place a little bit. There's no cohesiveness to this. It's her doing this. I'm doing that. My paycheck here. Her's there. And I think that's the root problem. You guys are not working as a team.

Starting point is 00:08:15 You're working as two business partners trying to make a household work, and it doesn't work that way. So tonight, if I were you, I would sit down, I would download every dollar, and you guys together create a household budget. And together, what are your debts? The $5,000 loan is as much yours as it is hers. I mean, you guys own all of this together and agree on where your money's going. If you're behind on your bills, doing more of the same isn't going to fix it. You need a different plan. And that's why I tell people about Guardian litigation group.

Starting point is 00:09:11 If you've missed payments, if collectors are calling nonstop, or if you're getting letters about legal action, that's your signal. And it's where a lot of people wait too long, because the longer you wait, the fewer options you usually have. And once it turns into a lawsuit, things can get more expensive and more complicated fast. Guardian litigation is a law firm, not a call center. From day one, you are assigned and a law. attorney who represents you. So if a creditor moves forward, you're not caught off guard and you're

Starting point is 00:09:43 not hit with surprise legal fees. Guardian litigation only gets paid when the debt is negotiated and the client accepts the settlement offer. This is about stepping in early while you still have leverage. Don't ignore the problem. Take control of it. Go to guardianlit.com slash Ramsey right now. That's guardian l-it.com slash Ramsey. Attorney advertising, results may vary and no specific outcome is guaranteed. Next up, we have Sherry in Orlando. Hi, Sherry. Welcome to the show.

Starting point is 00:10:26 Hi. I'm a little nervous. Oh, you're good. Don't be nervous. I'm 70, and I've been told by my financial advisor last week that my IRA is only going to last me about seven years. So he wants me to lower my distribution and raise the amount that's in the market. and he could just be getting a job. Well, I would love to get a job,

Starting point is 00:10:53 but I'm on high-flow oxygen. Oh. And I go through a tank about every hour and a half when I'm out. And no one's going to hire me. Yeah. I feel fine. I just can't breathe. Yeah, right. How much is in your IRA?

Starting point is 00:11:10 $130,000. And how much do you pull from it? How much have you been pulling from it every year or every month? Well, I've been pulling out 2,000 a month over the last two years. Okay. I waited. I had alimony until I was 69, so I waited. And so I've lowered my distribution to 1,500 because my only other source of income is Social Security.

Starting point is 00:11:34 And how much is that? It's 1,700 a month. On that amount, the 1,500 and the 700, does that cover your bills? Or tell us how much you're in the red? It's $1,700 a month. And right now it covers all my bills. My son pays my mortgage. How much is the mortgage?

Starting point is 00:11:59 It's $1,700 months also. Okay, so he takes care of that. So you have the $1,500 that you're still taking out, and then the $1,700 basically covers all your bills. Yes. Okay. And the problem is, I have an expensive illness, so I have to have Medicare, regular Medicare and a supplement.

Starting point is 00:12:21 Yes, yes. And that's where the $1,500 is going. A lot of it, yeah. And then APA and stuff like that. Your house, what do you owe on it and what's it worth? I bought it for $260 and it's down to $200. Okay. What's it worth?

Starting point is 00:12:44 It's probably worth $300. now at this point. Mm-hmm. And so when you talk to your financial advisor, was he saying you're going to run out in seven years if you continue to take the $3,000 before you cut that in half? Well, I was taking $2,000. Yeah.

Starting point is 00:13:04 And so even when I told him that I'd go down with the goal of going down to $1,000 a month in this abuse, and he still said, well, that's still too much. and I'm trying like S-B and I'm trying eBay and I sew and I'm trying that. But I've just started at it. It's going to take a while to build that up. What about customer service from home on the telephone? I could probably do that.

Starting point is 00:13:33 I'm just not sure where to look for it. I haven't had many net-clock on some of the site. I would look into that. I think that if you're able to have a conversation like this with us on the phone, that'd probably be a great place to start. And I would just, yeah, get on the internet and look for, you know, at the different job postings and see that. I've said on here before and again, this is not something that we endorse or anything.

Starting point is 00:13:58 It's just something I did back in the day. There's a company called a rise that you can go on and do different customer service jobs. There's basically a whole posting of them. And you can just choose which one you want. and you just need a headset and a computer and you can go from there. And it's not amazing money, but it is something. You probably make a couple thousand bucks a month doing that. That's all I need.

Starting point is 00:14:19 I mean, I've really lived very frivoly. Right, right. Yeah, because if you got to the point, Sherry, where you don't touch this money, let's just say for seven years, which I know, I may feel like a long time, then it doubles, right? So you got then 260 sitting there. And because you're withdrawing about 10%. which is high because the market in some years is doing great.

Starting point is 00:14:43 So he's probably running a very conservative estimate, which most investment professionals do when you're starting to withdraw money. And we actually probably take more of a lenient case. But even if you were, you know, taking out 6%, you probably would be okay. But then again, that gets you around to $1,000. And that's just basically just trying not to touch that $130. and you're just living off of the growth, which again, past years was 22% at one point, right? Which means your 130 would grow even if you were taking that 10%.

Starting point is 00:15:16 So it's probably kind of playing that game. He may be a little aggressive on the seven years of you running out in seven. I don't think that's going to happen. But, Sherry, if you can supplement your income and not touch this for even five years and find that extra thousand bucks a month somewhere else, that would be a game changer for you. Now also he wants me to increase what I have in the market. Right now it's at 30%. And he wants me to increase that to 40.

Starting point is 00:15:43 Do you think that's reasonable? How can you? Where is the money coming from? Well, I mean, the amount, right now, the majority of it is in bonds. Oh. Oh, in your IRA? Yes. Oh, no.

Starting point is 00:15:56 I would go all market. I didn't realize that. I didn't realize you had investment in bonds. That's probably where a lot of your problem is. your bonds are probably only yielding 3% Sherry where you could be making the numbers I was using was assumption that you had money invested in the market and that's

Starting point is 00:16:12 at you know 22% one year I think we're at 11% this year you're going to get triple if not more by investing in the market so Sherry I would I know that probably makes you uncomfortable I would at least go 80, 20

Starting point is 00:16:27 even at this age even if it what at this age even though on 70 years old Yes, because you're having to live off of the return of what's happening. Now, I know that probably does for you out, but you would have to write out, right, if there is a down year or two. But when you look historically, even over the last 10 years, your gains would be triple than what you have now. I would say you actually should be in the market more at your age to have more of an aggressive growth pattern. You don't have the luxury of sitting in bonds if you're trying to live off this money. right? Yes. So I, yeah, so he suggested to you 70% what was he? Because he's probably, he's probably being. Did he say 40? Is that what you said?

Starting point is 00:17:13 Yes, he said 40. I'd go, I'd go 60 because you're going to, you're going to make so much more in the market. Is he the one that put you in the bonds to begin with? Or were you working with someone and then switched to him or how did this happen? Well, when Biden got elected. I moved everything out. You did it. Okay. the market. And then when Trump got elected, I changed that. And I talked to my son at Christmas and he was telling me, yes, Mom, you need to be a little more aggressive. So I up, I upped it to 30%. And right now

Starting point is 00:17:47 my return is only 8.5%. Yeah. So I think what's happened is you've allowed the market to spook you in different phases of life. And really truly the way to build wealth while you're investing is you truly do. You have to set it and forget it. Once you commit to a strategy and we'll tell you what ours is, once you commit to it, you set it and forget it. It doesn't matter who's in presidential office. It doesn't matter what's going on. You are going to ride different waves. That is just part of it. So we're not going to sit here and tell you that there's never going to be a bump in the road. There is. But if you keep it invested, you don't lock in any losses, right? If you keep it invested, you continue to ride the wave and whatever dip occurs, you ride the wave until. You ride the wave until,

Starting point is 00:18:31 now we're back up again and above, right? So what I would do is what Rachel and I do, I would invest it across four different types of mutual funds. And if you don't, I think that the guy you're using is probably okay. But if you need somebody, you know, you can check out a smart vester pro and they can walk you through this. But you're looking for mutual funds that are outperforming the market, really. And that's where Rachel got that number of over 10% is what you should be looking for annualized, right? Obviously in the previous years, we've done way out, you know, way more than that. But yeah. growth, growth in income, aggressive growth in internationals, where you want this money. And at this stage in the game, I'm with Rachel, like 80, 20 feels fair. Yes. So I just ran some numbers real quick, Sherry. So if you're 70, let's just give you 10 more years at 80. If you put that 130 and didn't touch it at an 11% return, that turns into $38,000. If you kept it in those bonds and they're getting a 3% return, it only goes to $175,000. So the difference there is astronomical. Now that's over a 10-year period, which I know is a long time.

Starting point is 00:19:38 But if you just cut that in half, right, five years. So yes, Sherry, I'm with your financial advisor and your son. I would be more aggressive and be putting more in so that you can actually be taking some money out and you're not tapping into that nest egg because you're not outpacing inflation even at this point. If you want to free up margin in your budget, one of the first things you should do is take a hard look at your monthly bills because every dollar you overpay is another dollar you don't have for reaching your financial goals and overpaying for your phone bill well that makes zero sense and it's why I recommend boost mobile their unlimited plan is just $25 a month forever no contracts

Starting point is 00:20:38 no hidden fees no surprise price hikes if you already have a phone you love you can keep it and keep your number when you switch and if you're skeptical boost mobile offers a 30-day money-back guarantee, so you can try it risk-free. Listen, your phone bill should fit your budget, not the other way around. Reaching your financial goals is easier when you can pay less for the same service. Switching to BoostMobile now is just a smart money move. Go to BoostMobile.com slash Ramsey and make the switch today. That's boostmobile.com slash Ramsey.

Starting point is 00:21:15 $25 forever requires customers to remain active on BoostMobile. Unlimited Plan. The 2027 Ramsey Goal Planner is here and it's now available at the lowest price that we're going to offer at $35.97. Wow. So this planner is more practical than ever. You're going to get brand new contents from Jade Warsha, myself and Dr. John Deloney, plus goal setting guidance and really clear action steps to keep your momentum going all year long. So do not wait. Grab it by August 23rd for just 3597. This is the lowest that's going to get you guys. Even Black Friday pricing will not beat this. So go ahead and get your 2027 Ramsey goal planner. You can go to Ramsey Solutions.com slash store or if you're watching on YouTube or podcast, you can click the link in the description.

Starting point is 00:22:18 All right, let's go to Keisha in Atlanta. Hi, Keisha. Welcome to the show. Hi, Jade. Hi, hi, Rachel. Hello, hello. Welcome, welcome. How can we help? I'm first, I just want to say thank you all. So much for the advice that you're giving for being so transparent, you know, with what y'all have been through and for giving the practical advice that anybody can follow, it has really changed my life. So thank you so much for that. Thank you. So I wrote my question out because I always hear people say how nervous they're asking. I'm just going to read it.

Starting point is 00:22:50 All right. So here it is. So my fiance is 57 years old. He makes about 58,000 a year. Has about 60Ks in retirement. The only debt he has is 50K in. of car. He owns his home that he owes roughly about $100,000 on. Me, I'm 46. I make $120k a year. I have $88K in retirement through my job. I have $50K in mutual funds. And a high-eal savings

Starting point is 00:23:18 accounts, I have $20K. I have a rental that I owe about $46K on and no other debt. I'm on baby steps, $4,5, and $6. I currently live in air property that will sell. When I get married, I'm going to move to where he is, so we'll sell that, and we'll also sell his house and buy one together. So my question is, he has the 50K and debt in the car. Could we or should we have a wedding that's budgeted at $5,000 or less in July of 2027, or does he really, really need to focus on getting rid of that car loan? Before the wedding or to up the budget of the wedding?

Starting point is 00:23:57 What's the point? I'm just trying to find out, is it a, should we? Is it financial wise for us to have a wedding, although he's in debt? Yes. You know the wedding is only going to be $5K. No, you can. Yeah, I'd have the wedding, but I wouldn't have a $50,000 car if I make $58,000 a year. That's the problem.

Starting point is 00:24:14 Yeah. He needs to get rid of his car. We talked about that. And also tell me how, tell me about this $5,000 wedding. Inquiring minds want to know how you're about to accomplish this. So one of my good friends has a fabulous home, and we always, I want to have an outside wedding. So that's how we've been something I want. So they've allowed us to have the wedding at their house.

Starting point is 00:24:35 They're going to open up to us. Catering is really the only thing that we should have to pay for. That should be the most expensive thing. And a dress and a honeymoon. Oh, I am super simple. So my dress will be a sun dress, basically. Okay. You got it on lock.

Starting point is 00:24:55 Okay. So yes. To answer your question, I'm great with you spending $5,000 on your wedding. So yes, yes. The $50,000 car is the, it's bothersome. My heart sank. Oh, the car is actually, he paid it. The total cost was 80.

Starting point is 00:25:14 Oh. My heart dropped. What kind of car is it? It's a 2024 Ford Mustang. Okay. For 80 grand. That would not be on my being a car. No, no, I might either.

Starting point is 00:25:28 But he added some extra stuff to it. Oh, okay. the insurances, the bells and the whistles. So here's the question, then Keisha. Are you guys, now hear me, because everybody kind of has their wake-up moment at a different point. Do you guys align on your philosophy on money, on debt, on wealth building? Because if you're looking at this car the way Rachel and I are and you're like, oh, this is wild behavior.

Starting point is 00:25:55 But he looks at it and goes, this is so smart. I love this purchase. I'm not giving it up. and I would do it all over again, you guys are going to butt heads down the road financially and it's going to be tough for you. So have you spoken about this and gotten a glimpse of what you're about to walk in to? Because financially you're doing better than he is on paper, right? So, yeah, I am curious your thoughts towards his financial heads.

Starting point is 00:26:18 We actually talked about that over the weekend. And he says he's on board. Like I said, he doesn't have any of the debt. He doesn't do credit cards. On board with what? The financial plan. So I told them about living debt-free and building wealth and what my idea is and what I would like to do as far as those building together. And no more stupid purchasers, of course.

Starting point is 00:26:40 And he said we wouldn't make any decisions without talking to each other about it first. Okay. That's a good start, I think. But I think we keep having the lines of communication open because it's very different to say, do you want to build wealth? Yes, I want to build wealth too. Do you want to have financial peace? Yes, I do too. but it's the how of how it's done that, you know, because the truth is a big part of this is, well,

Starting point is 00:27:04 one thing that we have to do if we want to build wealth is we can't have toys that are going down in value that are this big of a piece of our world. And so getting, I think you're at the point where you can start specifying the conversations even more and saying, here's what I mean by that. It could mean us not driving $50,000 cars unless they're paid for, like that sort of thing. Absolutely. Absolutely. And I've gone through and I've taught FPU and so before we get married, like I'm looking at in September, let's going through FPU together so that he really understands and have a clear picture of where I want to go with my life. Well, you've done an incredible job. Yeah, we'll gift you the FPU by the way. Yes. That'll be our wedding gift to you. Yeah. And I think continuing to have this conversation is because Jade's exactly right. It's the high.

Starting point is 00:27:57 level picture of things that is so, so important that you're like, we agree on that. And then when you start to actually get into the details of life and you actually have to go through with the actions, I didn't know that's what you meant. It's like, well, if it means that, then I don't want this. And so that can be, that can be tough. So thanks for the call, though. Kuchin, and congratulations. Yes. All right, let's go to Mandy in St. Louis. Hi, Mandy. Welcome to the show. Mandy, are you there? Yes, I am. How are you? guys, being Rachel. We're doing great. Thanks for calling in. How can we help?

Starting point is 00:28:35 First of all, I just have to say that when you two hosts, and I'm listening on my earbuds, I have to see what you guys are dressed and look like because you guys are like classic and simple, and it's like, it's like inspiring. So I'm a long-time listener and super excited to talk to you ladies. I'm 44. My husband and I on Baby Step 6. We have a 12. We have a 12. 12-year-old and a 9-year-old. And we make about a little over $200,000 a year. And I had wonderful parents, but I was raised with no, like, financial knowledge. And they're wonderful people, but they're living off of Social Security and, like, a small pension. They have no nest egg. So we are missing our 15 percent, and we're doing well. But when I started to clean up

Starting point is 00:29:26 our finances, I started looking at their stuff, and they had. savings account and money and piggy banks and stuff like that. So we took their money and put it in some index funds with our financial planner. And every year, our financial planner, they go with us to our financial planning meeting and he turns the computer around and he shows them, this is how much money you guys made this year, this is what you're invested in. And I just want to know, am I doing right by my kids? Is it too much for their age? It's a very age-appropriate conversations, he answers their silly little questions and things like that, but I just want to know are we doing stuff too early for them? That's a great question. I'm not mad about that. I don't want

Starting point is 00:30:09 that to be the only isolated conversation and interaction they have with their own money. I want them to also have some money that they can cash, right, or that's on like a green light card or something that they can spend and use and save and give. Like I would want real life. interaction with money for them, even more than the index funds. But if you do both, I think that's great. My parents did that. We had mutual funds. And I want to say we were probably 13-ish, maybe a little older than yours.

Starting point is 00:30:41 And we would look at it. And they would pull it. Now, that was when it was mailed to you in like a big packet. So I think you're doing a great job, Mandy. I would keep doing that. I wouldn't change that part. I would just add in more interaction. They're getting their hands on their own money.

Starting point is 00:30:57 Yes, so that they're giving some of their money that they work for, they're saving some of it, they're spending some. I want them to feel the day-to-day interaction with money, not just the investment side. But no, I think we're both. I agree. Yeah, well done, Mandy. Great job. Hey, guys, it's Rachel Cruz. If you're working the baby steps, every major expense deserves a second look. And health care is one of the biggest expenses in most family's budgets. And that is why I recommend that you check out Christian health care. ministries. CHM isn't insurance. It's a health cost-sharing ministry. That means members help pay one another's medical bills, and they've been serving Christians since 1981. CHM programs start at just $115 a month. And here's why that matters. If you are paying more than you need to for health care, that money could be going toward paying off debt, building your emergency fund, or reaching your next financial goal. And your monthly cost isn't based on your medical history or where you live.

Starting point is 00:32:09 Y'all, a lot of families find CHM gives them more room in the budget. That's why so many members say they're better with CHM. And right now, new members can receive a 50% credit towards their first month of membership. Go to CHministries.org slash budget and use promo code Ramsey. That's CHministries.org slash budget and promo code Ramsey. Next up, we have Terry in Orlando, Florida. Hi, Terry. Welcome to the show. Terry, are you there?

Starting point is 00:32:59 Terry. Maybe she'll come back. Yes, yes, hi, sorry, sorry. Oh, there he is. Hey, Terry, how are you? Doing good. How are you guys doing? It's an honor to be on the show.

Starting point is 00:33:08 Oh, thank you. Thanks for calling in. How can we help? Long story short, my wife is having serious talks about divorce me because of my bad financial habits. Oh, no. Okay. Gosh. Yeah.

Starting point is 00:33:21 How long have you been married? Two years. Okay. Two years? Two years. Yeah, yeah. Two years. So tell us about your bad financial habits.

Starting point is 00:33:33 Long, well, I don't really initiate when it comes to financial meetings with each other. We don't really, I don't really talk about our finances too much. That's really on her side of things. Like, I'll make the money or, you know, my half or my share and I'll just, like, you share account. and I'll just like leave it there and whatever the gist of it. I'll kind of do here and there. Like if there's something that needs to be paid, I'll do it, but I don't really know too much about our finances.

Starting point is 00:34:01 And then our most recent situation that caused the divorce talks is that there was, like, again, like she'll process most of the payments. And three months ago, I- What is she asking for from you? What is it that she wants you to do that you have been unable to do in her? eyes? Like, I said initiate a processor and payments on top of certain payments.

Starting point is 00:34:27 I just got my car repoed and there's three months of late fees and I just paid off all those to get released. Did it get repowed because you simply were not Yeah, you just didn't pay the payment or you didn't have the money to pay the payment?

Starting point is 00:34:45 Which one? I didn't pay the payment. We had the money that's it. And can I ask Why? Just you forgot or you thought she was going to do, like, what was the reasoning behind that? It was more just, not to get too many a degree, I just, I just avoided it. Okay. Okay. Do you go ahead. How old are you, Terry? 29. 29. And how old your wife?

Starting point is 00:35:17 She's 27. 27, okay. Before you guys got married, did you pay your own bills? Or how did things get done before you got married? Or was it just a state of mess? I was a teenager. Not before you got married. You're 29. You've only been married two years.

Starting point is 00:35:37 We've been together for almost eight years, 10. So what you're saying is she's always taking care of that? Is that what you're saying? Not always. I'll do it here and there, but for the most part, yes. And I screwed up and I avoided it And that's the part what I'm trying to change Uh-huh

Starting point is 00:35:55 Okay, and do you know yourself well enough to know why? What fear comes up in you That you're like, I have to push this thought aside To even pay a car payment I don't even want to, that's, I don't want to engage that at all Where does that come from? I would just, I don't think of fear Well, maybe fear somewhere that I don't understand

Starting point is 00:36:17 But I would just say laziness Is it just pure lazy? I'm very comfortable. Just lazy. I think there's something else there, Terry. I do too. Because you go to work. If you were a lazy person, you wouldn't get up and go to work.

Starting point is 00:36:31 If you were all that lazy, you probably wouldn't be calling the show. I feel like there's clearly in certain areas a level of intentionality that you have the ability to have. And so that's why I have a hard time just with, nope, you're just a lazy guy. You can't do it. How did you grow up with money, Terry? What was your home situation like with money? I came from a Caribbean family, and that's already a story in itself. You came from what?

Starting point is 00:36:55 A Caribbean family. Oh, okay. Yeah. And, like, I didn't really, like, think of it like this. You have support, but you don't at the same time. And it really is, like, if you mess up, it's strictly on you. And that's kind of how I've been. And I say lazy to chalk it up because I don't, oh, sorry.

Starting point is 00:37:15 Because I just, I mean, I, I, I, I, I, only have a calability to take. And like, hey, I didn't miss those three months. The car payments, and it did mess us up. Do you all have a baby, Terry? Really much. Yes, I do. You do. Okay. How old is the baby? He is officially two months. Two months. Okay. Sweet thing. Okay. Can you tell me, because I'm trying to get a sense, because don't get me wrong, this is a big deal, and it's a frustrating thing. I want to know if there's some other things that are pushing harder on the divorce conversation than just who pays the car payment?

Starting point is 00:37:53 Are you working regularly? Does the laziness show itself in other areas of life? Like, are you not working regularly? Are you not helping out around the house? Are there other things that are going on that's not money related, that this is really just one of the many things? Or is this the only thing? And you're like, okay, I got to get this one thing right.

Starting point is 00:38:12 Just be honest. I mean, to keep the state, you know, I would say, yeah, we have, like, you know what? Really, she doesn't have multiple things. But I would say it shows itself up in other ways or factors like you're, she said it's accumulation of these five bad financial habits. And I have been trying to change, but it just, it just keeps every time in the mistake, like the repo, she'll bring a divorce. Like, the last time I caught got reposed, she brought divorce.

Starting point is 00:38:43 So I don't think this is, I'm going to be honest with you, I don't think this is a money issue. I think this is, I think you have some marriage issues and I think you have some personal issues. I think she wants you to step up, Terry. I'm going to be honest. I think I'd be pissed if I just had a baby and my husband can't even pay his own car payment. Like I mean, a little bit of me, Terry is like. You got to be able to do the minimums and basics. Yes, you have to step up.

Starting point is 00:39:09 And so there's, and I know you know that or you wouldn't have called. so you know what you have to do but something is blocking you to go and do it and I think that that's work you've got to do Terry you got to figure out what is going on and in the meantime you just have to have action and you're going to have to rebuild

Starting point is 00:39:26 some trust with her because I think she's just pissed I think she's been doing this on her own and she's been taking care of the money because you even said I made the money and I put in the account and that's her thing she's tired she wants she wants a partner yeah she wants a teammate with her

Starting point is 00:39:41 and to be a husband that loves her, serves her. And what Jade is pointing out is exactly right. When you actually start fixing some of these issues, and we'll use money as the main one, because that's why you called, and you actually start being so selfless, and you're like literally saying, this is what I want to do,

Starting point is 00:40:00 but I know that's probably not the right thing. So I'm going to engage in this process that makes me so uncomfortable, but I'm going to choose to do it for the betterment of my marriage. And you do that, it's going to trickle through all the, other areas of your marriage when you start to change in one area because it changes you, Terry.

Starting point is 00:40:15 And I think part of it is you figuring out what is that mental block for you? And if I were you, I would spend a couple hundred bucks a month and go find a counselor or a therapist. And I would. I do think money can be such an embarrassment, shameful, guilt-ridden topic. And you're not feeling much relief at home because your wife's threatening to leave. But you got to, you got to, that confidence. Yeah, you've got to work some of this stuff out of what is holding you back, because there's something there. And in the meantime, I do want to be clear, in my opinion, you still have to make some steps moving forward to take care of this baby. As that baby cried in the phone, I was like, oh my gosh, they got a new baby in the home. Like, you have a lot of

Starting point is 00:41:00 responsibility. And it's doable, Terry, because the money's sitting there. It's not like you can't hold a job and you don't have the money. It's just following through with a couple of things. And if you have to make a checklist or have reminders on your phone. You have put a reminder. It's due today. Pay it. Whatever it is to put into place some actions. That's why I think it's got to be deeper than that because those things, the logistics of it is quite easy.

Starting point is 00:41:26 I set the alarm. It rings. Or I put it on auto draft. What about that? That's right. Then you're not even thinking about it at all, Terry. Well, you know, actually the thing is, like, when it came to a car payment, I really, and this is I have to emphasize, I thought I did put on. Auto Pay. Okay, but what stops you, let me stop. What stops you from right now, the moment you get off

Starting point is 00:41:45 this phone, I realized it wasn't on auto pay. Therefore, I'm going to put it on autopay this second. Then I'm going to show it to my wife and say, hey, I realize I messed up the last one, but I put it on autopay. I just want to show you that I did that. It's going to come out every month on the 15th. And I would ask her, what do you need from me? In this, ask your wife that, what do you need to see from me to help start making some steps towards rebuilding this trust. Because fight for this marriage, Terry. You've been with there all this time.

Starting point is 00:42:17 And I don't want you to lose this. To me, this can be solved. And for the sake of that baby and everyone, do not let this tear your marriage apart. Fight for it. And do what you have to do to rebuild that trust. If you're waiting for the perfect interest rate before you buy a home or refinance,

Starting point is 00:42:40 that moment may never come. That's why people should talk to Churchill mortgage, because rates move every day. and when rates drop, buyers flood the market, which means more competition and higher home prices. Smart buyers know they can't time the market. They move with a strategy. Buy the home you can afford now and refinance later if rates improve. Churchill helps you understand what you can actually afford, not just what you qualify for.

Starting point is 00:43:05 And with their certified homebuyer program, you can get fully underwritten before you shop, so you can make moves faster and make stronger offers. And right now, Churchill has a special offer only for the Ramsey Audie. go to Churchillmortgage.com slash Ramsey offer to learn more. That's a special website. Remember this. Churchillmortgage.com slash Ramsey offer. This is a paid advertisement.

Starting point is 00:43:26 The Churchill certified homebuyer program is available for qualifying borrowers and select loan types only. NMLSID 1591.1. NMLS ConsumerExcess.org, Equal Housing Lender. 1749, Mallory Lane, Suite 100. Brent went into C, 3702727. Welcome back to The Ramsey Show in the Fair Winds Credit Union Studio. I am Rachel Cruz with Jade Warshaw.

Starting point is 00:43:51 and we're answering your questions about life and money. So give us a call at AAA 825-5-2-2-2-5. We have Cambria in Virginia Beach up next. Hi, welcome to the show. Hey, how are you? Hi, we're doing great. How can we help? I'm wanting to know if I'm being selfish,

Starting point is 00:44:16 wanting to go on a family really expensive and once in a lifetime family vacation. Oh. I like this. I like this question. Okay. What's the situation? So we've been debt-free. We've been doing Dave Ramsey for about 15 years.

Starting point is 00:44:40 We used to teach it. We actually came out to the studio about 10 years ago and met Dave. And we are in a really good financial situation. But my husband is retiring from the military in March. And next June, my dad wants to go to Sweden. That's our heritage. And he's always wanted to take this trip. He's turning 80.

Starting point is 00:45:08 And he wants to do a 12-day cruise that's about 5 grand, not including, you know, anything off the ship, excursions or anything. And flights for my husband and I and our two kids about $4,000. And then he wants to stay a week afterwards. And he's going to take care of the Airbnb or whatever we stay in after. But it's still going to be, you know, a good, like, $1,000 a trip. I would say 15. Yeah, I would say, yeah, I'd aim high.

Starting point is 00:45:47 15,000, I would say. Yeah, so yes. So where's the problem? Well, with my husband retiring, not knowing what job he's going to get, what, how much money, you know, he'll be making, how much time off he's going to be able to have, you know, four months after starting a new job. And, you know, I really want to take this cruise. he's willing to do the week after. And so I guess my question is, do I, like he said, we can try and, you know, make it work to the best of our goal. Well, you've been debt-free 10 years.

Starting point is 00:46:27 So tell us about the other money that you have. I mean, when somebody tells me that, I'm waiting to hear of some, you know, several hundred grants laying around in different places. So we've actually, we've been debt-free 15 years. and we have over half a million in our Roth IRA. Good. We have, you know, several different investments on the side. We have about $20,000 that we've gained in. Like, we have, we keep our car funds in, oh, my gosh, I can't remember the app.

Starting point is 00:47:08 Just tell me how much liquid cash do you have? Probably 60 to 60,000. Okay, so 60,000 of liquid cash, and we'll just say that includes sinking funds, emergency funds. Is that fair enough? Yes. Okay. And then you've got, you said the 500 and your Roth IRAs. Any other money laying around?

Starting point is 00:47:34 I don't think so. There might be some here and there and, like, crypto and whatnot that we... Is the house, where are you guys at with your house? We are about 175. Okay. And how much do you guys bring in a year now? About 150, maybe 150. And is he the only one working?

Starting point is 00:47:57 Yes. I'm a singer, so I gig here and there, but it's not, you know, it's just fun money. So he'll, so he's making 150. Will he get anything with retirement when he, when he retires? He'll have about 5,000 a month to wake up. Okay. Okay. Okay.

Starting point is 00:48:15 So, I mean, this is, I think I heard you say this is next year, like June of 2027, right? Yes. Is there the ability to save up the way you've done for your other sinking funds and have this off to the side? I mean, you've got a year to do it. A little less? Yes. It's kind of harder because in April we started, we decided. We decided to, we didn't know about this trip.

Starting point is 00:48:41 And in April, we started remodeling part of our house because we decided we're going to stay here. We're going to, you know, we're getting all the military. We're staying here. We love our house. We've been here 10 years. How much does a remodel cost? We've spent almost 20,000 so far and we're trying to cash flow as much of it as possible. How much to go?

Starting point is 00:49:04 And probably another 40. Okay. So the good news is we know you guys can stack up money to, you know, to spend $60,000 on something at will. Like, so every month, we put stuff in different funds every month. And if we stopped doing that, there's probably, you know, there's probably about $2,000 to $2,500 that we could. there isn't $1,000 of like discretionary money that that we choose every month where we want it to go. I would seek to do this. I would seek to do this without touching, if you're going to do this, my goal would be let's cash flow it.

Starting point is 00:49:48 Let's do the remodel and we have to put a bow on that first. But let's look ahead and see what our money is looking like. When will we be done cash flowing the remodel? From then on, will we have enough money to put the $15,000 aside for this? Part of that conversation also is what's he going to do after he retires. And that's a big part of this. And part of his onboarding package for his new job could be slotted. Hey, I do have a three-week vacation that's been planned and it's paid for.

Starting point is 00:50:18 So as I start my job, part of my contract of starting this new employment can be that this can't take away from any PTO. You know what I mean? Like you can negotiate some of that with a new employer. And we did talk about that. Yeah. So no, yes, I think you go. You have the ability to go. Listen to me, I'm such a spender.

Starting point is 00:50:38 I'm like, come on. You have to go. I mean, your dad's 80. Yes. Yes. I mean, seriously. These are the things you cannot miss out on in life. You know, it's crazy is Winston's family, my husband's family, his grandmother came from

Starting point is 00:50:49 Sweden, from Stockholm. And we did a, it's weird. As you're talking, I was like, is this me? We did a cruise with my family around the same, probably the same Baltic Sea type cruise. And we went to like the cemetery. where all of his, yes, where his great grandparents. I mean, it was amazing and beautiful and like such a, it does. It feels like kind of a once in a lifetime type thing.

Starting point is 00:51:12 And with your dad who's 80, like you won't regret going. So yes, figure out a way to do it. And this sounds terrible. Maybe I've been married too long. But I'm like, if he doesn't want to do the cruise, he doesn't have to go. He doesn't have to go. Meet us over there. Honestly, yes.

Starting point is 00:51:27 That's not bad. I mean, seriously. Like, yeah. And if his work can't hold, he'll be okay. He's not crazy about going to Sweden, it sounds like. So I don't know. I would take kids and go with your parents. I would go with your parents.

Starting point is 00:51:40 But when you've done what you have to do and you've been debt-free for 10, 15 years, this is precisely the thing that you should be doing. Yes, absolutely. Money is a tool to use to create a life that you love. And part of that is with your family, creating memories. And you're not out of control. You guys have half a million in retirement. Your debt for, I mean, like, it all checks off in my book.

Starting point is 00:52:03 So I, I'm a green light. But I'm with Jay. You got to cash flow with it. You guys need to be disciplines and start saving. But you got a year, which is great. You're going to be fine. A lot of banks are happy to hold your money. But Fairwin's credit union helps you make progress.

Starting point is 00:52:39 Most people spend years focusing on their financial goals and never stop to ask whether their bank is helping them get there or just holding onto their money. The real goal is building an emergency fund, paying cash for your next car, saving for a home. Looking at your finances and actually feeling some peace. That's why I love Fairwinds. Their smart bundle gives you up to 10 free high-yield savings accounts to help you stay organized as you save for different goals. Plus, early direct deposit and no monthly fees. And you get support from real people who want to help you win with money. You can even get the Ramsey

Starting point is 00:53:10 Debt is Normal Be Weird debit card, which is linked to your free Fairwind Spend Smart checking account to tell the world you think differently about money. So look, if you're working the baby steps, your bank should be helping you move toward financial freedom, not just park your cash. Go to fairwinds.org slash Ramsey to open your smart bundle and start making progress today. That's fairwinds.org slash Ramsey, insured by the NCUA. Today's question of the day is brought to you by Y Refi. When private student loan payments start getting away from you, it can feel like you're paying for decisions you made years ago. Why Refi helps borrowers explore low fixed rate refinancing options and pay.

Starting point is 00:54:03 payments designed around your current situation. So go visit why refi.com slash Ramsey may not be available in all states. Okay. Today's question comes from Camilla in Illinois. She says, I often hear the advice that you need one million in your retirement fund or some other arbitrary number. Does that amount apply to a married couple or does each individual need to have that amount invested? I assume it's combined because as a married couple, you're combining other finances, but what happens when spouses are different ages and retire at different stages. So I like this question, Camilla. So first let me start out by saying the number that you need to retire comfortably is different for everybody. There is not one number that is a one size fits all. Now, you do hear the number

Starting point is 00:54:49 one million because obviously that's the first layer of the millions. And it's like if you can hit a million dollars, yeah, that's an amazing milestone. So I think that's why people park there a lot. and you hear a lot on social media or even in the media that is a million dollars enough to retire does a million dollars get you as far as it used to i just think those are buzz it's just a buzzy um number so that being said what you're what you're really looking for when you retire just big picture is you want enough in your nest egg that you can live off the interest without really having to touch the nest egg that's kind of what you're shooting for obviously you want to be able to account for inflation in that equation and then

Starting point is 00:55:30 that allows you to leave money to your children's children, right? That's the whole point of being able to build that sort of wealth. And some people are able to do that and some people aren't. They, you know, they learn this later on and they have a nest egg and they draw on the nest egg and they draw it down, right? So what I would suggest is working with a smart fester pro and figuring out what that number is for you. Around here, we've kind of figured out that 15% if you invest that annually or monthly, out of your gross income, that's kind of the magic number that should help you hit the number that you need for retirement. That's why we teach that. But the number truly is Rachel different for everybody. It is. Yeah. And depending on your lifestyle and what you want in retirement age, you know,

Starting point is 00:56:15 some people want to go more simplistic. And they're like, I want to just, I want to downsize. You know, they want to go. Some people go the opposite way. And you're like, I want to travel more, you know, so you kind of want to picture as much as you can, you know, what you want to do. But that 15% is the rule of thumb. And having no debt. That's right. Oh, yeah. And if you have a paid for house and everything, like it, that is, that's the way to go. So yeah, the million dollars in retirement, yep, that will depend on your lifestyle and how much you're planning on taking out of that fund. I guess we can talk about, she also mentioned it being together or separate. Oh, yes. So you do want separate retirement accounts because you want to get that tax advantage as much as possible. So individually, you both should have rough IRAs, individually, you know, 401Ks if your company has it or 403Bs or a CEP, you know, but if both of you have those going, yes, one of you will be able to draw out of theirs tax free, you know, at 59.5 if it's a Roth before the other. And then maybe you guys live on that and the other one decides to keep working

Starting point is 00:57:21 or maybe they stop working because you got enough there for the 59 year, 59 and a half year old to take enough out to sustain the lifestyle you want. So yeah, definitely different. but from the mindset that we're still working out of one, we're seeing it still as ours. Yes, it's ours together. But to your point, you can take advantage of more money going into those accounts, $7,500 each in the Roth or whatever your limit is for your 401Ks, that sort of thing. All right.

Starting point is 00:57:46 Let's go to James in Iowa City, Iowa. Hi, James. Welcome to the show. Hello, how are you? Hi, we're doing great. How can we help? So I have a question on behalf of my great. grandma. She is debt-free, lives on a farm, has a home, has a cell tower on the farm that pays her

Starting point is 00:58:11 monthly. I think it's like $1,800 a month that she gets for having the cell tower on her farm. They came to her with three different offers, a one-time lump sum payment of $355,000 for 20 years, or a second option of $390,000 over installments over five years, or the third option, $428,000 over 10-year installments. What happens if during, what happens to the deal if for some reason over that period of time, whether it's the 510 or 20, and she moves, what happens to the deal? She will not be moving. But I'm just saying.

Starting point is 00:59:02 We need to know. I think it would go to the person who... It would have to be part of the land lease, part of the contract of the new sale of the home. Yeah. Or even if she passes away, James, and you guys sell the property to someone else, I guess is that part of the language,

Starting point is 00:59:18 that if there's a new owner... They automatically... They have to assume this tower for X amount of years. Yes. Okay, gotcha. Okay. How much money does she have? She has right now, I think, like $50,000 in cash, but she also gets Social Security and she has a retirement. And I think her husband had something that she gets. He's passed away and she still gets something. I don't know if it was a military benefit. Okay. Do you know what the retirement next day is? What, like meaning what she has in retirement.

Starting point is 00:59:57 Mm-hmm. I think it's just the $50,000. Okay. Actually, no, I don't know what's in her retirement account, actually, because she does have something saved that is in addition to social security. But I know it's not very much. Okay. I mean, my knee-jerk, James, I'll be curious what Jade has to say is I always like a lump sum

Starting point is 01:00:22 because she can turn around and invest that and make a great return. I think she'll get probably the most bang for her buck doing it that way. Even though it's a lesser amount, I think she will make from a return perspective more getting it within five years versus 20 years. Yeah. I mean, that's basically what we would say with even a pension or something like that. If you can have the lump sum and reinvest it. Or the lottery.

Starting point is 01:00:48 If someone with the lottery, go ahead and take it all. So that's, that's, she's 82. Okay. So she has been living her whole life off of what she gets at monthly. So this is something completely foreign to her. She's never heard of anything like this. Sure. The tower, my grandpa, handled it all.

Starting point is 01:01:13 And they were, he just wanted him out of his face, basically, and they were paying him $500 a month. Now, her son, my own. uncle who has passed away, got them up to $1,800. And now it goes up, I think, 5% every five years. So if we did not take a lump sum, it would go up 5% every five years. After the 20 years, it would have gone up. Yeah, I think she could make more in the market, having a lump sum.

Starting point is 01:01:47 Because if it's every five years, would you say every five years it goes up 5% or every year? Yes. Yeah. Every five years. Yeah. I think I lean towards taking lump sum in five years. I lean towards that too. Yeah.

Starting point is 01:02:08 I think it's a no-brainer, honestly. And have her sit down with, and you probably will help her, James, because you're kind of an advocate, you know, for her even in this call. Sit down with a smart vester pro. You can find one on Ramsey Solutions.com and figure out the best way. from even a tax perspective of if she invests this money, because it sounds like she's pretty low maintenance. She's probably not going to use, if any of it, but from a generational perspective,

Starting point is 01:02:34 what a beautiful thing, right, to be passed down one or two generations to be able to help out family, right, with what this money could be. And so I would sit down with an investment professional and just figure out from a trust standpoint, or even a will, the taxes.

Starting point is 01:02:55 I don't know. I would want someone looking at this amount of money and just saying how can we make this go the furthest? Yeah, the best way. The best way possible for her. And if she needs any of it, it is hers. I'm not just like, I'm not tagging that. This lady sounds like not for her.

Starting point is 01:03:06 She doesn't hardly. It doesn't sound like she cares for. I mean, she's like, I'm good, I'm good, which is amazing. But man, what a crazy thing. That's pretty cool. Pretty wild. Yeah, so great. Well, thanks for the call, James.

Starting point is 01:03:38 Hey guys, George here. I love the movie's Angel makes because they always deliver great entertainment. And I want to tell you about their newest movie coming out August 14th, The Brink of War. It's a historical drama about the 1986 summit in Iceland, when President Reagan and Soviet leader Gorbachev faced each other in the height of the Cold War with the fate of the world on the line. It's got Jeff Daniels in it, Jared Harris, J.K. Simmons, and the cast alone tells you this is a serious film. And it's the kind of movie that's perfect for a date night. An angel also has you covered for other date nights and a lot of nights when you stay in. Because when you become a premium member of the Angel Guild, you get two free tickets to the brink of war in theaters,

Starting point is 01:04:14 access to angels' entire family-friendly streaming library, and free tickets to every future Angel theatrical release. So use promo code date night and you get four months of your annual membership for free. Come on, President Reagan had to negotiate with Gorbachev to get a deal this good. You just need a promo code. That's angel.com slash Ramsey to become a premium member of the Angel Guild, use code date night. angel.com slash Ramsey promo code date night. Up next we have Michelle in Spokane, Washington. Hi, Michelle. Welcome to the show.

Starting point is 01:04:58 Hi, thank you for taking my call. You're welcome. How can we help? Well, I'm a 56-year-old divorced woman with no retirement saved in a mountain of debt. Baby Step 2. And my question is, once I finally get to Baby Step 4, because I have no retirement, should I stick with the 15% of my take home to invest or should I maybe consider increasing that while I'm working on paying off my home? Well, let's tackle one thing at a time because you've got a mountain in front of you, so let's just one step at a time. So tell us about the debt that you have the consumer debt.

Starting point is 01:05:37 Well, the consumer debt is I owe my mom $1,500. I owe the IRS, $5,600. I have about $14,624 in credit cards. Okay. Did you say that number again? Credit $14,624 in credit cards. Okay. A $23,976.76 car loan.

Starting point is 01:06:04 Okay. And this is the scary one, $50,603 in personal loans. Got it. Okay. Michelle, what's been going on? Did all this kind of escalate after the divorce? It's just been years. I spent a lot of almost 30 years paying off student loans.

Starting point is 01:06:24 Okay. Sorry. No, you're okay. It's a lot. How fresh is the divorce? Oh, it's many years. I've been by myself with kids for many years now. Okay, okay.

Starting point is 01:06:35 How many kids do you have? I have three. The youngest just graduated. Nobody has student loan debt if I've done anything, right? Good. That's great. That's excellent. you make a year, Michelle?

Starting point is 01:06:47 About 84,000. Okay. Okay, perfect. Okay. How much do you see every month in your month to month? Take home? Yeah. I take home about $7,000. I pay myself a, I'm self-employed, so I pay myself a wage that nets down to about $5,000. And I try to take another $2,000 from the business each month. Okay. And you're not investing. right now, right? I'm not investing at all. I've been seven months into baby step two, so I am making

Starting point is 01:07:20 progress. Good for you. Very good. Good. How much debt do you have being thrown at? I'm sorry, how much cash per month is going towards paying off debt? Two thousand, three? I just got to the point where I can put $2,500 towards the debt. Good. Okay. Fabulous. I have free to $500 to move. Yes. I started with about 2,800. That's perfect. I'm moving forward. Okay. So within three months, the IRS and the $1,500 loan should be close to paid off.

Starting point is 01:07:53 That's my plan. Perfect. Okay, great. What kind of work do you do? Are you able to do extra work, side hustle, add more to this? I hate to say what I do for a living. I'm a bookkeeper and accountant. That's okay.

Starting point is 01:08:07 Listen. Don't be ashamed to that. You're fine. Yeah. Yeah. I know, but I always did the accountant. the ones that make it. Right. No, you're fine. You are fine. So, yes, I haven't been saying, I haven't been saying no to work. I've been working myself quite a bit. I don't see the need at this

Starting point is 01:08:23 point to get a side hustle because I have the potential to work more doing what. Okay. So I would, I would quantify that because sometimes you can take on more work, but you may not see the dollar side of it as soon as you want to. So I would really put a goal around how much do I need to earn per month to hit this goal and how many clients does that amount to so that you are very intentional about going after that money. And then like Rachel said, just keep going smallest to largest by balance. And that's how you do the debt snowball. Like she said, in three months, once you've paid off your mom in the IRS, now whatever those minimum payments were, if you were making those, that's now going to go on to these credit cards. Is it one credit card or several smaller ones?

Starting point is 01:09:07 It's two. I've paid off all the little ones. Everything's closed. Okay, good. I think if my math is right, Michelle, and again, if you throw on some extra money, I think in two and a half years, this could all be gone. And my hope is, too, with this car, and that includes possibly selling this car. Do you know how much you could get for it? Maybe $27,000. Oh, okay.

Starting point is 01:09:35 That's great. You owe $23, right? Almost $24. Okay. I would get a couple of thousand bucks. Michelle, sell it, put that together and go get an $6, $8,000 car. Because that's going to speed up this process so fast for you. Because I think the urgency of retirement savings is on your heels.

Starting point is 01:09:59 And so if you can wake up call, ladies. Yes, for sure. But if you can be out of debts, let's say by 59, okay, for the sake of our discussion, and you start throwing, I'm using our retirement calculator right here. And I'm going to say, do you have anything in retirement right now? Nothing. Okay, nothing. Okay.

Starting point is 01:10:24 Let's just, I'm going to go big here just for the sake of all of it. Okay, so let's say you start investing at 59, retirement age is 67, and let's say you put three grand in a month. Like you are, you are just throwing money in this account. You're saying a number that I've been thinking in my head and at least my time on is matching what the two of you are proposing. Well, you're just taking what you were putting on debt and now you're turning around and investing it. And what you're going to have, you're going to have $458,000. Okay. At that point.

Starting point is 01:11:02 By six. By 67. Yep. That's pretty wild. That you go from negative to positive to half, almost half a million dollars. Michelle. So stay with the 15% then and just continue to work on the house and investing. Okay.

Starting point is 01:11:20 Yeah. Tell us about your mortgage. I'm just curious. Oh, I owe $217,000. My house payment is $1,610 a month. Okay. Okay. Yeah.

Starting point is 01:11:34 Yeah, I probably was a little aggressive on the $3,000 a month because you do want to throw some of that at the house. So it may be a little less than that with a paid-off house. I wasn't, I got too excited for you, Michelle. Well, it still might be. I needed to hear that. I just need to know that there's, yeah, and, you know, and you get to make the decision what you want. We find the fastest way is to get the house paid off and on, but with your age, if you, you know,

Starting point is 01:11:58 if you said, you know, I am going to throw more at retirement and keep my low house payments, you know, that could be your decision. I'm not saying to do that, but I'm just thinking if you're aggressively throwing some money in investments, I think that that. I think there is hope. Let's just say that. However you kind of slice the pie, I think you're going to be good. Thank you. Yes. Thank you. I've been really overwhelmed and fearful. So thank you ladies, both. Yes, and you're a good mom, Michelle. I mean, even the fact that you were like fighting hard for these kids not to have student loans because you said you took so long to pay yours off and you're like, I don't, I can't do that. And there is a wake up call and everyone has that moment, Michelle, we kind of call it the I've had it moment where you look up and you're like, I'm 56. I've worked so hard. I've started my own business. I'm put my kids through college, but like, what about me? You know, you get to this point and it makes you mad. But that anger kind of creates that great. to get out of this. But it's, this is doable, right? I don't think, I don't see you in consumer debt for

Starting point is 01:13:02 for six years, right? I mean, like you could really make a lot of progress. And I think you're feeling that. So, um, thanks for the call, Michelle. We appreciate it. Oh, it's going to take a lot of intentionality. But I, I think with what we teach, there's always a measure of hope and there's always a measure of increase that can be gained, right? Yes. She may not have. have a million dollars, but it's better to have $458,000, right, than $0. So there's always a better measure of hope that can come from doing this. Yes. And that is a pro to owning your own business.

Starting point is 01:13:38 I mean, that is one thing because you can kind of, you can set your schedule. And even, you know, I mean, I know plenty of people in their 70s and they're still killing it. Yes. You know what I mean? Yeah, you can work longer if you choose to. Yes. Yes.

Starting point is 01:13:48 And you can kind of create this environment that you need, order to create, you know, have income on the side and you're not just dependent upon those investments at 67 too, right? That could be an option. So it is tough. I think it's a, it's probably a wake-up call for a lot of people, too, Michelle, to realize, like, yes, the day is coming. Like, it's happening. And the sooner you start, the better off you're going to be. As a dad of young kids, I'm starting to think a lot more about the world they're growing up in and how I'll help them make sense of it as they get older. And that's why I like World Watch, a video news service for preteens and teens, because Because one thing I know for sure, if you don't teach your kids how to understand the world, somebody else will.

Starting point is 01:14:58 And these days, that could be TikTok, YouTube, Instagram influencers, or whoever happens to show up in their social media feed. World Watch's 10-minute videos help young people understand what's happening in the world through a Christian worldview without all the outrage, negativity, and noise that is everywhere these days. The reporting is factual, engaging, and designed specifically for pre-teens and teens. And World Watch creates opportunities for something every family needs more of. meaningful conversations. Instead of just reacting to headlines, kids learn how to think about what's happening in the

Starting point is 01:15:30 world, and parents get a chance to keep those conversations going at home. Because when my kids are old enough, I want them informed, not overwhelmed. And right now, you can get a 30-day free trial. Just go to worldwatch. dot news slash Ramsey or use promo code Ramsey to get started. That's worldwatch. dot news slash Ramsey. We wish we could get to every call and question on the show.

Starting point is 01:16:05 But if you have a money question and you want an answer for your situation, head over to our website and use Ask Ramsey. Ask Ramsey is our free AI tool that's built and trained on Ramsey principles, so you're going to get an answer the same way that we would answer on the show. And I used this the other day, Jade. For something I was looking at, and they continue to update it. They are really iterating this, like to make it as good as possible. And they'll ask you some questions to get a better insight into your situation. And I was like, that's what I would have asked. I thought that as the question comes up for me, I was like, that's probably what I would ask on the show.

Starting point is 01:16:39 So it really is, it is amazing. So go and ask your question today at ramsysolutions.com or click the link in the description if you're listening on podcast or watching on YouTube. All right, so let's go to Luke in Billings, Montana. Hi, Luke. Welcome to the show. Hi, how's it going? Thanks for taking my call. Absolutely.

Starting point is 01:16:58 How can we help today? So we, my wife and I are in babysat. six, and I'm having a hard time convincing her to cut up all the credit cards and let the FICA score go to zero because she's nervous when and if we go to refire house for a lower interest rate because we use our FICO score basically, you know, to get our house original. So it sounds like she's missing a piece of information, I think. Because in her mind, she's thinking, if we have a zero credit score, we won't be able to get as good of a interest rate. Yep.

Starting point is 01:17:43 And I'm determined. They just can't pull up the information because you've been out of debt and closed all the accounts. And that only takes about nine to 12 months. It's not that long. And that's what I've told her in the whole manual writing or whatever it's called. Why doesn't she believe it? Has she said, this is the reason why I don't believe that, that you're telling me the truth. or that that fact is real.

Starting point is 01:18:06 She just says, we used it to get our house originally, and it took so long to get it to a good score, and I just don't want to close it. And I'm trying to explain it to her a few times. How much further do you guys have to pay off your house? We just bought it like six months ago, So we owe like $520 on it. And she thinks that you guys are going to refinance.

Starting point is 01:18:36 And she have a belief that it's going to go back down to 2% interest rate because it's not. Yeah, right now we're at 6. Yeah. And that's pretty normal. I mean, from what everything that, you know, the Fed is doing and all that, like for the foreseeable future, nobody is saying that it's going to go down significantly. It's probably going to stay pretty steady for a long time. Because remember two loops that the 2% that we were living at,

Starting point is 01:19:04 was an unheard of, like that was unheard of. It was a result of. Yes, all this other borrowing that was happening. And so it's corrected itself. And so six percent actually in the grand scheme of mortgages is not pretty good. That bad, right? It's bad for us because we've been used to 2%. But it's probably, probably never, I mean, most real estate experts are saying that it's probably never going to go back to 2%. Uh-huh. Gotcha. But I do want to challenge you, and I don't, I think it's intellectually fair to do this in America. that when you're talking about something, if one person is talking about it from a perspective of facts and the other person kind of refuses to do their side of the work of the argument,

Starting point is 01:19:47 which is if you're doing your side, which is here's the information I found, she needs to do her side, which is I need to read the information or I need to see. It can't just be on a vibe, but needs to be on, have a fair, have a fair intellectual conversation. And I would challenge her on that. I'd say, honey, I've looked into both sides of this. I understand the credit score side of it and I understand the manual underwriting side. I think you're only looking at one side and I would really love for you to just read up on this and see that I'm not making this up. This is really here. There's two options to inform your ability to borrow money and you're stuck on one and there's a whole other option here that's actually better for our lifestyle.

Starting point is 01:20:29 And I think that's okay to do and just challenge her. that was a good idea yeah so that yeah I've pretty much I mean I've been listening to your guys the show for a little while now and the more I dig the more I see

Starting point is 01:20:44 the more I'm ready to cut them up yeah but she's not she's not ready does she use it on a monthly basis and pays it off because no they're all ours are all paid off they're all at zero we have our emergency fund and everything okay so we invest it

Starting point is 01:21:01 she needs to know though that's four will go down if you are not actively using debt, though. They will penalize you for that. So if she's going to her plan, it's going to slow, it's going to go, it's going to die a slow death versus just, you know, taking care of it now. And then it's all fine in about nine to 12 months. Yeah, that's another really good point, Rachel, because she's got, if she wants to do the credit route, she's got to know, hey, it's not just having one line of credit open, right? It's, they're looking at the different types of credit you have. How long you've had the credit. credit. What utilization of the credit you, right? There's all these different markers that they're

Starting point is 01:21:36 measuring. So that's a really good point, Rachel just made. Yeah. And she's more of like the use it for use it for a tank of fuel, pay it off. You know what I think? I think it's a comfort mechanism. I think it's just a comfort thing. It's not based on any facts. It's not based on math or, you know, it's just this is what she feels comfortable with. And I would challenge that. Yeah. And she has even said before, you know, what if we need it or something like that? It's like, we got 40K in the bank. I think we're probably fine. Yeah, when you're used to this like false safety net, which is what debt is, right? I mean, this is what banks and credit card companies pray for. They love being in someone's wallets for the just in case because the just in case happens. And so this is what they're wanting.

Starting point is 01:22:30 And I think, you know, when you said you've been listening for a while, part of our, my, my, like, frustration with that whole industry is, is they take advantage of people. They sit there and market themselves like they're helping you and they're not because the people that actually cannot pay their credit card bills and that now it's gotten up to $1.4 trillion in credit card debt. And Americans that are really struggling and really are living paycheck to paycheck, everyone else gets to take advantage of that with the points and whatever. and then we've been brainwashed with this whole idea of the FICO score and the credit score. And yeah, do you have to jump through a few more hoops to do something different? Yeah, because you're not playing their game, but it still can be done. Like, we both have great, incredible lives. I know.

Starting point is 01:23:13 And it's fine. Like, you really can live without this, you guys. You really can and have complete autonomy. And MasterCard isn't the thing that catches your emergencies. It's you, that you have built up a. system within your family that you know no one has a say in and it's beautiful yeah i always say it's it's i mean to your point you're brainwashed hearing this seeing the commercials and so you know that's the grace that i have for her is we all grew up that way you know that's right that's right never leave home

Starting point is 01:23:44 without it right and the truth about that is there's so much money and revenue and profit tied to that style of borrowing money for a mortgage is usually what people are thinking of but you don't have commercials about manual underwriting. Like nobody's talking about it except us. And so for her, she's thinking, I've never heard what you're saying, but I hear, you know, the majority of the world, the majority of the noise is talking about it in this way. And I think sometimes you do. You have to be willing to go against the grain, do your research, not let it be, oh,

Starting point is 01:24:18 because so-and-so said it, but actually look into it and look into the facts and dig in and know what the heck it is that you're talking about and not just make stuff up. Yeah. Yeah. So if you do get out of debt, which is our baby step two, where you get out of all consumer debt. And then baby step three is you save up a fully funded emergency fund. And then you want to go buy a home you guys for you first time home buyers. That's baby step three B. And we say to save at least a five to 20 percent down payment. And if you have been out of debt and you've closed your accounts, okay? You've closed all your accounts. Now if you have a mortgage, it's a different story. Because it's going to be there. It's going to be there. But if you have been out of debt. But if you have If you don't have any debt within nine to 12 months, you guys, your credit score goes to what's called undetermined. They cannot determine your credit score because they don't have any debt information on you because there is no history to that point for them of how far they go back. And so they do a process called manual underwriting and you have to be current on a job for two years. You have to show proof of paying bills on time like your cell phone insurance for two years. Yes.

Starting point is 01:25:23 And so there's some, there's elements of this that you. get some paperwork, but you can still get a mortgage, even without a FICO score. Let me tell you what I get asked all the time. When should I get term life insurance? How much do I need? Is it affordable? Those are the right questions to be asking. So let's take a quick review. The fact is, term life isn't a baby step. So if anyone is dependent on your income, you need to have 10 to 12 times your income in life insurance. Now, and most people are surprised by how affordable term life really is. Even if you're not in perfect health. Look, I understand the hesitation, since most insurance companies make it more of a hassle than it needs to be. Not at Zander

Starting point is 01:26:27 insurance. They're not an insurance company. They're a broker that works for you. That means they'll shop and compare the top term life companies to find the most competitive options on the coverage for your family. For almost 30 years, I've recommended Zander for straight answers, competitive rates and coverage that actually protects your family. Call 800-356-42-82 or go to zander.com for a quick and easy quote. That's zander.com. Welcome back to The Ramsey Show in the Fairwinds Credit Union Studio. I am Rachel Cruz with Jade Warshaw and we are answering your questions about life and money.

Starting point is 01:27:16 So give us a call at AAA 825-5-225. All right. Let's go to Macon, Georgia, and we have Poncho on the line. Hi, Poncho. Welcome to the show. Hey, how you doing, man? Thank you all for taking my call. Yeah, absolutely. How can we help today? Yes, ma'am. So long story short, and I keep a brief, I've got a, I'm basically retired from two careers. I'm 41, so I feel like I've won in life, but I'm going to go back to school, figure out something I want to do when I grow up.

Starting point is 01:27:48 And I've got really no debt. I've been working on the baby steps. I got my emergency fund, fully funded in a high-yield savings. But I have some chunks of money from some pensions and a $4.57, it was a public safety $4.57. So I don't have any penalties. So my question for y'all is, the only real debt I have is my mortgage. And I just want to know, should I invest? Should I pay it off? What do y'all think?

Starting point is 01:28:20 Well, I want to know. I mean, you said you've retired from this job. What will be your income moving forward? Will you be receiving some sort of retirement income from these jobs? Or tell me more about what your income is going to be and that will help us. Okay. Okay. Absolutely. So I am retired military. So I do have a pension. I'll get for the rest of my life. Okay. How much is that? it's just under 50 grand a year. Okay. And I do some part-time stuff now. Actually, I just retired a couple months ago. I want to go back to school, you know, through the VA.

Starting point is 01:28:57 I'm going to learn a trade. So trying to just reinventing myself. But the advice I got was, I'll take all this money and then put it in an annuity. And I'm like, I don't think Mr. Ramsey's a big fan of annuity. No, I wouldn't do that. I would be interested in investing on my own. And really, you're to that point, if you've got three to six months in an emergency fund, which you did say you had some money, I would double check and try to get it, you know,

Starting point is 01:29:24 six months is a great place to start. And then from there, yeah, I'd be investing 15% off of the gross. So off the $50,000 a year. That's around $625. And I would start with a Roth IRA. I'd, you know, max one of those out. And then from there, you know, go on to the next thing. if by that point you do have a job that is offering a 401k, that's a great place to go.

Starting point is 01:29:47 If they have a match, I'd even go there first. And do your best to spread this investment around until you get to the $15%, the $625. But that's not an annuity. That's invested, you know, through mutual funds in the market. Yes, ma'am. So I have some money from a pension. I have some money parked in an IRA now, but I've just got different chunks of money in different spots.

Starting point is 01:30:15 And, you know, I listen to this whole spiel about annuities. And I'm like, I said, wait a minute. I said, I'm a follower of Dave Ramsey. And, you know. They didn't like that probably. No, no. And they're like, oh, well, you know, the annuities, the old ones had a stigma. And I'm just like, I just ain't passing the smell test.

Starting point is 01:30:33 Yeah, well, the problem with it is you get, especially like a fixed annuity, you get stuck in a situation that has low interest. It's low risk, but it's just your money can be doing so much more. There's usually a lot of fees attached to annuities, you know, in some cases some good commission for the guys selling it. Of course. And so, yeah, there's just probably more. Okay, so I am curious. You said you got money in different places.

Starting point is 01:30:58 So you have your pension coming in. You have your emergency fund and a high-yield savings account. How much is in there? Just under 12 grand. 12 grand, perfect. Okay. And then what else do you have? What's in your IRA?

Starting point is 01:31:12 Well, so it's being moved from the county side. I want to say it's just under, it's either 48 or 50 grand. Okay. And what's that invested in right now? Do you know? No, ma'am. I just put it in a rough kind of like a holding pattern. Okay.

Starting point is 01:31:29 And then what else do you have? I have a 457. I've got, geez, I got about 95 grand in there, which I have access to. I mean, it was all pre-tax. There's tax deferred, but there's not going to be a penalty. What's that invested in? Do you know? Do you know how much you're making on those, on that?

Starting point is 01:31:48 I want to say my ROI last year was about 19%. Okay, that's great. Yeah, so I almost would just park it. I mean, it's doing great. If it's invested in something long term that you're not happy with, like a, you know, mutual funds or an index funds, you could always cash it out and move it. But then you may, because you said there's no penalties or taxes with that. Well, there is taxes, unfortunately.

Starting point is 01:32:14 So that, you know, if I were to just cash that out and like, say, put it towards my mortgage. Yeah, yeah, yeah. Okay. So, yeah, I would probably leave that because that feels like it's doing well. Okay, what else? Let's see. And I have a couple small missions that I'll get. but not until I'm, you know, 55.

Starting point is 01:32:34 Okay. So those are your four big buckets, really. The retirement coming from the military, your IRA, the 95,000 sitting. And in the emergency fund. Okay. Well, I think you're doing good, Punch. I mean, I think if you can cash flow school, if you can go work, or no, no, it's going to be paid for because of the military. So, yeah, go get, I think go get a degree.

Starting point is 01:32:58 You just have to be able to live. I mean, my goal would be not for you to touch these investments. because you are 41 and able to hopefully live off maybe this whatever, 47,400 that comes to you monthly or maybe get a job while you're in school, right, and find a trade and kind of create the next season of your life, the next chapter of your life. Yes, ma'am. I talk about a true, true blessing because I was, you know, I was pretty freaking poor, much of my old life. And I'm like, man, I've been giving this golden opportunity. I work my tail off, but I'm not to sit at home and do nothing type of guy, but I also, all these chunks

Starting point is 01:33:39 of money, I don't want to squander it. No, you're doing better than you think you are. And the truth is you should have a couple of chunks of money. Like, the way you have this divided is just right. Everyone should have an emergency fund and a high yield savings. You've got that. Everyone should have some sort of retirement nest egg, whether it's an IRA or a Roth IRA. Most people have some sort of a 401k or a 403B, in your case, a 457. And then, And it's just a blessing, you know, that you're receiving some retirement off of it, you know, early. So you're exactly, you're exactly right. Where you should be.

Starting point is 01:34:13 Yes, ma'am. Yep. Great job. Well, you know, we're going to send you, Ken Coleman's book, Find the Work You're Wired to do because there's a great assessment in the back. And it may just help narrow down some ideas for this next chapter, Pancho. But I think the next step for you is college, or the degree or trade school, you know, whatever you choose, that next step. in education to get the next job. And then when you have that next job, like Jade's saying, invest 15% of that active income

Starting point is 01:34:39 coming in and be paying off the house if you have your house. And yeah, and then that's what that's it. So it's not that much complicated. I know it probably feels like a lot. Simple. And well done. Thank you for your service and everything you did for this country, Poncho. We so appreciate it.

Starting point is 01:34:56 And it's amazing that you can go from, what do you say? It was just so poor. Just broke. Broke. Broke is a joke. To what you've got now. It's very, very impressive. So keep doing what you've been doing.

Starting point is 01:35:10 Yeah, nothing's wrong. I would stay away from the annuities, so I'm glad you called in. Hey guys, Rachel Cruz here, and I love summer. There is more fun on the calendar, more time with your people, and way more chances to make memories. But you know what else there's more of? Spending. Oh, between the extra groceries and gas and camp fees and family trips, it all starts to

Starting point is 01:36:12 add up so fast. And before you know it, money stress starts to steal the fun out of everything. And that is why I love the Every Dollar budget app because it helps you plan your money, track your spending, and find more margin in your budget so that you can put extra cash towards the goals that matter most. Enjoy your summer without the money stress. Download the Every Dollar app in the App Store or Google Play and start for free today. Are you sick and tired of working so hard and having nothing to show for it? Well, that is normal. A normal is broke, but you don't have to live that way.

Starting point is 01:37:04 Our every dollar budget app helps you find extra money every month and build you a personalized plan to beat debt and build wealth. And in just 15 minutes, you'll find thousands of dollars of hidden margin and it's going to feel like you've got to raise. So don't live normal when you can live like no one else. So start every dollar for free in the app store or Google Play. All right, let's go to Tony in Cincinnati. Hi, Tony. Welcome to the show. Hey, guys.

Starting point is 01:37:34 Thanks for taking time to take my call. Absolutely. How can we help? I have a question for you. I'm 55. My wife is 52. And right now we pay extra on our house every month. And we're on track to have it paid off in about eight years.

Starting point is 01:37:49 The mortgage is a 2.75 interest rate. And I'm wondering if I should not be paying the extra and instead using a portion of it to invest. Oh, yeah. It's the common question that we get. Yes, the classic question when it comes to paying your house off early. I mean, the truth is paying off your house early is more than just a math question, right? You do want to go into retirement without a mortgage, and that's a big piece of this. And I will say this, there are worse.

Starting point is 01:38:22 things that you could do, right? You could say, yeah, I just want to do this and invest money. But you also want to have a paid for mortgage in eight years. And so I do believe that a major part of wealth building is not just money in retirement, but also having the peace and security of having a paid off house. And so I would stay the course and I would put the extra pay off the house in eight years. And then after that, you can go hog wild on investing if you want to. Well, I've been just, I just had my head down. I continued to plow forward and then I recently started thinking, am I actually doing the right thing? Sure. By paying this low mortgage rate off early.

Starting point is 01:39:01 Right. Yeah. And if you look at it from just a math perspective, Tony, sure. You're going to make the spread of 10% in the market. If you have a 2% on your home on interest that you're paying versus 12% you could be making, right? And just like round numbers. So from a math perspective, that is true. But what is not calculated in the Excel sheets that you create is peace of mind. It really is that. It's that. It is this idea of having complete autonomy over your life and your money that if whatever happens, they can't take your house. A bank doesn't own you anymore.

Starting point is 01:39:42 There is something about that freedom. that I promise almost everyone we talk to that pays off their house does not regret it. They don't want to go back in. And we used to make the joke all the time, you know, if you hate having a paid-for-house, you can go get another mortgage. If you wanted to, I know that would be at now 6%. So I know that that argument doesn't last as much anymore. But there's just, yeah, there's an emotional spiritual side of money and debt that we talk about

Starting point is 01:40:12 that a lot of people don't. Again, you can't factor that into your calculations because it's not there. But yeah, I would say stay the course. I think having that paid off home, and then you could go back and reinvest your mortgage payment every month for the rest of, you know, retirement if you want to do that. But having that paid off house is a game changer. Just having something that's truly yours. It's yours.

Starting point is 01:40:38 No one can take it from you. Yes. All right. let's go to Cody in Wichita, Kansas. Hi, Cody. Welcome to the show. Thank you for taking time to answer my call. I appreciate it. Absolutely. How can we help today? Yeah, so I'm 23. I own a fencing business and I'm getting married in about three months from now and I need a house to live in. Thank you. I need somewhere to live and I can't run my fencing business just out of any place to rent. I can't find really any. And I'm just wondering, would it be stupid to go borrow about $200,000 to $250,000 to build a house? I would not. I would pause just from a couple of things you said kind of gave me like a head tilt.

Starting point is 01:41:28 When you say there's no rentals that I can have to run my business out of. You know, when you make big statements like that, it shows to me that you may not have done all your research and when you start to limit your options because of a belief system, then you pin yourself in a corner where you're like, the only thing I can do is build a home to make my life what I need it to be. So I would push against that philosophy, okay? I would I would implore you to be a little more creative in it. That's thing one. Thing two, I would not build a house my first year of marriage. There are so many decisions, so many things that change. in life. You guys just need to enjoy. Enjoy life as a newlywed at 23 years old. You're running your

Starting point is 01:42:16 own business. You have enough stress on you, Cody, already. I would, I would get creative, find a rental. I don't know if you even have to rent somewhere else to run the company out of. I don't know what that looks like for you, but I would do that for a year. And then if you guys look up in a year and say, hey, we want to, you know, make a different, make a move, then that's when I would start talking about doing something. And then, Cody, let's even talk about. talk about since I agree 100% with Rachel, but, you know, there is going to come a time when you do want to buy a house and you want to be ready and prepared to do that the right way. And there is a good, better and best way to do that. And we'll tell you the best way, which is, honestly,

Starting point is 01:42:56 to be out of debt, to have three to six months of expenses. Do you guys have that right now? Are you guys at that step by chance? No, I am not out of debt. So right now, I'm actually in debt quite a ways. Oh, yeah? With fairly good assets, I own a piece of property. I owe about $430,000 on it. It's worth about $700. What kind of property? It's just pasture land. I live on the farm. Okay. Okay. It's 160 acres. So I have cows that I obviously run on that, that helped me make my payment, but I also would like to pay it off. And then I have, I have, vehicle note for, I think, 30,000 or something like that. What about your wife to be?

Starting point is 01:43:48 She doesn't have any vehicle loans at all. She has no debt at all. Okay. So, yeah, I mean, I'll be honest with you. If I were looking at this, I mean, the first order of business, I'd pay off the car debt. And then this land could be the difference between you guys having a house sooner than later, unless you're thinking you were going to build something on that land.

Starting point is 01:44:11 What was the plan? Yes. So actually my dad has a bunch of land as well, and he deeded me over just 10 acres to my name. If we were wanting to build a house, he would deed that over to me. Okay. And that'd be separate than the pasture that you told us about? Yes, so I would have 170 then. Yeah.

Starting point is 01:44:35 I love the idea because you've got this business that you're building that apparently needs a special space for it. I might love the idea of at the right time offloading this pasture land because that might be the money that you need to build something cash. Yeah, how many acres is it, Cody? 160 acres. Okay. So, I mean, yeah, going forward, it's a great asset that you have.

Starting point is 01:45:00 So I would make it a goal to pay off the car because how much will you guys be making a year together? A year together. I think I'm about the business. is only about two years old, and this year I'm projected to make about 150 to 200,000. Good job. And then she was in, she works at a bank, but getting ready for the wedding and stuff like that. I don't know.

Starting point is 01:45:27 Yeah, she's not, she's quitting her job, but I'm sure she'll start. So I would guess we'd be making around 200,000 or something like that. 200. Okay, amazing. So, yeah, I would make it a goal, Cody, to pay off the truck. you guys get a fully funded emergency fund of three to six months of expenses. And I would start saving after that a chunk of money because I do think, you know, building on that land, I think that's great. If your dad deeds over, I mean, that's a gift for sure.

Starting point is 01:45:57 But I would not, I would do this in maybe two years. And then part of if you need more money past the savings, which you will, I might consider selling some of the acreage. the property to help build this. And then you guys are going to have a massive loan of $430,000 that you're going to have to work to pay off. I mean, that's a lot of risk, Cody. I'll just throw it out there. I know it's working out right now, but I'm just telling you, that's a lot of money to pay off. All right, let's cut to the chase. It's easy to get discouraged about crazy house prices and interest rates. But when you have the right real estate agent to help you buy and sell the right way, confidence to make smart decisions. Ramsey trusted agents aren't just experts who guide you through

Starting point is 01:47:02 buying or selling. They're people you can trust to have your back from the first call to closing day. Find a Ramsey trusted agent near you at Ramsey Solutions.com slash agent. That's ramsysolutions.com if this show has helped you think differently about money, will you share it with somebody in your life? One of the best ways to spread the word about the show is honestly you guys. It's the word of mouth of how it's helped you because we do. We want to get as many people as possible to a place where they have financial peace. So make sure to share the show with your friends and family. We would greatly appreciate it.

Starting point is 01:47:53 All right. Let's go to Ann in Colorado Springs. Hi, Ann. Hi. Thanks so much for taking my question. Yes, absolutely. What's up? Well, mine's a little bit different.

Starting point is 01:48:05 I'm not calling from a personal standpoint. I'm calling on behalf of my job. I am an executive director of a small nonprofit in rural Colorado. Just a little bit of a backstory that I'll maybe help understand things. We had to purchase a new facility five years ago so we could open a free medical clinic. And prior to that, we did not have a mortgage whatsoever. And we only bought the new building with a promise from a grant funder that after a year they would pay off the remainder of the mortgage. So we went into it not thinking we were going to have a mortgage for very long.

Starting point is 01:48:49 And within that year, when I approached them again, my previous position as I was a fundraiser, it was when Roe v. Wade had fell and they no longer supported pregnancy resource centers, which is what we were. So now we got stuck with a mortgage. Oh, no. The grant didn't go through. It didn't. Oh, man. Man.

Starting point is 01:49:10 And the original mortgage was only for five years and it was a great interest rate. It's for 10 years total, but the first five years was like 3% interest. Okay. We did not realize that at five years that it was a variable interest mortgage and it jumped to 6.7%. Shoot. Yes. So that leads to where we are now. I took over as director two years ago and inherited $50,000 of debt for the center for the nonprofit. And by the grace of God, we have eliminated all of that debt. And for the first time in 40 years, we actually reached our first goal of having a six-month operating buffer. Oh, my gosh, Anne. Well done. You balance that budget. I like your style. Oh, I balanced it.

Starting point is 01:50:03 She's like, I'm getting there. This is a new problem for the board and myself to have because we've never had anything over like we were nervous to pay the electric every month. And now we have a full six months operating cost, which to me I hate debt, but I also hate living in fear that we're not going to be able to provide our services and pay bills. So with all that done, does it make the mortgage manager? or tell us where the problem is? Well, the mortgage is manageable because I've shifted some things and I've actually rented out space in our building that pays for the mortgage. But it has a balloon payment due in five years. Can it be refinanced?

Starting point is 01:50:50 Well, and that's the step that we are right now. So that's my big question is we looked into refinancing. We found an amazing Christian company that's going to help us refinance. It will drop our mortgage rate by $200 a month. Great. And there's no more variable rate, which is the biggest. There's no more variable rate. And in fact, we can revisit it every, I think we have that for every three years,

Starting point is 01:51:16 that if the rate is lower, we can reameterize the system. Okay. That's fabulous. So where's the problem? The problem is, is we have kind of a split opinion on my board of directors. and that split is to not because we owe $220,000 on our building. And they think the part that is disagreeing with the plan right now thinks that we should put every penny that we have directly to the mortgage. Including the six months of buffer?

Starting point is 01:51:49 Yes. And how much is in there? We have $157,000 right now in our buffer. Okay. Which is technically about seven and a half months. Yeah. I have no problems throwing anything over the six months at the mortgage and try to get it paid off as quickly as possible, but I'm really nervous not to have that buffer. So what?

Starting point is 01:52:11 You have to win votes. Is that the situation you need to be lobbying for votes? We want to make sure that we're doing the right thing. I agree with you. This is the first problem for us that we've ever had. Uh-huh. We want to make sure that we are honoring God and being good stewards because we depend on our donors. And one of the points of view is it's not honoring to our donors to have anything in savings.

Starting point is 01:52:35 But I'm like, to me, that's being a good steward to make sure that we can keep going, you know, beyond today. So should we keep our six-month buffer and throw anything over that at the mortgage so we can try to remove that debt as quick as possible? or should we throw every penny at it to try to erase the debt? No, I could even see a split, Ann, personally. If you went down to three months, I wonder if you guys could get some agreements because there's a nonprofit that we support, and I remember we looked over the books at one point, and they did have a ton of savings, and even me, you know, Ramsey Solutions.

Starting point is 01:53:16 I even kind of was like, okay, well, they can be using some of this money, anywhere, right? So I do wonder, I think that it's a great goal to have eventually again, but I do wonder if there's a little bit of a compromise, Ann, that if you guys are like, hey, let's go down to four months or three months. And this is kind of even just using the rule of thumb of just even the baby steps from a consumer side, not running a business, you know, of that three to six months. But even Ramsey, I mean, yeah, retained earnings for six months, that's pretty conservative. You know what I mean? I think you could take it down a little bit to throw some cash at this mortgage.

Starting point is 01:53:55 And again, part of it is to get everybody on board. And part of it is I think that that's an okay move. I would not take it down to zero. That does feel unwise to do that. Yes. To be at zero, no savings, no retained earnings. There's no. Yeah.

Starting point is 01:54:09 And you don't get taxed on retained earnings for nonprofit, correct? Correct. Yeah. Okay. So that's great. That's great. We have our six-month buffer in four separate. investment accounts that we can access at any time in case there's an emergency. And we have

Starting point is 01:54:26 those maturing every six months. We have two six-month ones and one and two one-year ones. So there's always one maturing every six months. Okay. Has there kind of keep it liquid? Besides not getting that grant, because I would consider that an emergency, that's like a wow, change of plans. Have you guys run into any big emergencies that you've had to use that fund for in the last 24 months? Well, we've also been very blessed in the last 24 months that we've been able to do all of our major maintenance and improvements and upgrades. We repaired our roof. We replaced our H-FAC system.

Starting point is 01:55:01 Okay. So there's nothing really looming out there that you would need. Yeah. I mean, I would be okay taking it. I'd take it down. I would be okay taking it down to three, Ann. And I would because I think you guys can, because again, when this balloon is due, do you say in five years?

Starting point is 01:55:22 Yeah, and so we're in the process of refinancing it now. Oh, that's right. You are going to refinance. Okay. And if you've been able to cash flow all of those major projects, if you take this down to three months like Rachel is suggesting and I agree with her and then you commit to cash flowing the rest with the same margin that you were using to do those projects, this mortgage is going to be gone in no time. Yep. Yeah, I would hope so. I hate that. I know, I know. How quickly did you pay off the $50,000? It took 18 months. Okay. So, really, so if you threw 80 at this.

Starting point is 01:55:54 And then another additional six months to get everything else taking care of. So we've done a ton of work in two years. Yeah, it's amazing. It's a great problem to have. For sure. Yeah, because if you look at it, if you took 80, right, and maybe through it, you know, you'd be down to 160. Mm-hmm.

Starting point is 01:56:10 And you said it took about 18 months to do 50,000. You pan it out and I'm like, yeah, in probably four years, you guys could get this building paid off. It's pretty amazing. Yeah, that would be the best thing. Because I want to throw everything. My personal goal is to have every penny that we possibly can to go to helping our clients. Absolutely. I know.

Starting point is 01:56:31 Absolutely. And so if we have a mortgage, that's money that we're not being able to help back. Totally, yes. Well, you're incredible yet. I mean, you took that organization by the rain. And you just said, here's what we're doing and looking at all of it because to have someone like you in that nonprofit world with that business mind to even look to refinance so you're not stuck with this horrible adjustable rate mortgage, even those moves are so wise. So, so wise. So well done, Ann. Hey guys, George Camel here. Do you ever feel like insurance companies only care about your money and not what you actually need? Well, there's a better way. When you go to Ramsey's Insurance Resource Hub, you'll start feeling confident that you're getting the right coverage.

Starting point is 01:57:30 that's truly best for you. You'll find helpful info on everything from life insurance, health insurance, identity theft protection, and more. And when you're ready to get the coverage you need, you can connect with a Ramsey trusted insurance pro who will only get you what you need at the best price. Go to ramsysolutions.com slash insurance. Ramsey Solutions.com slash insurance.

Starting point is 01:57:48 Our scripture of the day is Psalm 104 24. How many are your works, Lord? In wisdom, you made them all. The earth is full of your creatures. Vera Wang said. Oh, I like that. Vera Wang quotes. When you have a passion for something, then you tend not only to be better at it,

Starting point is 01:58:23 but you work harder at it too. Indeed. I would agree with that. Vera Wang. All right, let's go to Lanaya in Minneapolis. Hi, welcome to the show. We're taking my call today. Yes, absolutely.

Starting point is 01:58:40 How can we help? So I got a couple of issues or things going. on in a complicated situation. Okay. So first one is me and my husband. We're about $120,000 in debt. We're 28 and about to be 29. I'm finishing college.

Starting point is 01:59:02 So that's a lot of it is student loans, some in collections, a car. And right now we make enough money on paper, but we're stuck in this daily pay cycle. that our job offers where we're able to cash out our earnings every day. And so it's really detracting from our paychecks. And we're just stuck in this vicious cycle. Every day?

Starting point is 01:59:27 You can take part of your- Every day. Oh, wow. Yes. Do you get charged a fee or insurance? I mean, anything, or is it just, that's how you're getting paid? It's like $1.99 or $2.99 every time you can cash out. Okay.

Starting point is 01:59:41 You can cash out up to twice a day. What do you guys do for a living? So we work for the same company. My husband works from home in a different department. And then I basically customer service and then I work in the back office in office. What do you guys work? I'm sorry, what do you guys earn collectively? 85 to 95,000.

Starting point is 02:00:05 He's on 32 to 40 hours flex weeks. So it can range between the 85 to 95 altogether. Okay. What do you, do you guys have kids? I'm making 40. We have one two-year-old daughter. A two-year-old, okay. And what are you going back to school for?

Starting point is 02:00:23 I'm in school for psychology, and I plan on getting my master's degree. Okay. Do you know how you're going to pay for that? As of right now, no. We might stop and pause school to cash flow once we get into a better spot. But right now, we've been taking out loans. How much longer do you have until you graduate? I have one semester left until I'm done with my bachelor's degree.

Starting point is 02:00:50 And how much of the 120 is student loans? About 50. It'll be 60 after everything. Okay. 60K. How much do you guys own the car? 24,000. Okay.

Starting point is 02:01:04 And what's in collections right now? Is it credit cards? A couple personal loans and some credit cards. What does that add up to? About $50,000. $50,000. And those are all in collections? Yeah, about $40,000 in collections.

Starting point is 02:01:21 Most of it's on my husband's side because he had some larger credit cards and he had the larger personal loan. And then we have about $8,000 of active credit cards. We just decided that we were going to stop using them altogether. Good. How long have those bills been in collections? How long has it been sitting there? A couple years now. Okay.

Starting point is 02:01:41 So the good news on that is we should be able to settle. that and make some deals on that for significantly cheaper than the $50,000. And that would be something that I would make it probably my full-time job. I'd start with the smallest one, kind of snowball it. And whenever you guys can pile up some money, I'd try to settle it for maybe a quarter on the dollar and do it that way. I just want to go back. I want to make sure I understood you.

Starting point is 02:02:05 I thought I heard you say you make $90,000. Then I thought you said I heard you say plus $40. Did I hear that? Or it's $90,000 total? No. It's about 40 to each of us. 40 to each of you. Got it.

Starting point is 02:02:19 Okay. He makes a little bit more than me, but he makes less hours. Once you get the ability for overtime. Once you get the degree, you have one semester left, what's your income going to go up to? Hopefully for me alone, somewhere in the 90,000 to 100,000 range. Once I have my master's. Yeah, no, no, no. Just with this degree, nothing, because it doesn't, I don't think it adds value to your current job, right?

Starting point is 02:02:48 No, not really. I can become like a case manager, something like that for about what I'm making now. Yeah. Okay. All right. So the degree is a little bit of a wash, and we're not going to go deeper in debt to get the masters to hopefully make then 100. Yeah. So we are, okay.

Starting point is 02:03:07 So, I mean, the number one goal would be to get you guys your head above water just in your current day-to-day bills so you're not having to have this daily pay. Yes, yeah, yeah, yeah. I want you on a rhythm. And so what this usually means is you kind of have to, like, shock the system, which is going to mean working weekends, working nights somewhere. and it's going to probably take, I would think, a good 60 days of another job, to get some cash flow in so that you guys have enough in your account that you don't have to be waiting on that next paycheck, if that makes sense, that there's enough in there to pay what you guys need for the next one.

Starting point is 02:03:56 And so I did something stupid too. I cashed out my 401K. There wasn't much in it. It was $1,600. before taxes. So I have that on the way to just give us a buffer of something so that we can get out of the cycle. And that was the only reason why I did it. Do you know, let's pretend today that you were current and you weren't behind on anything. Do you know with the amount of money that you bring in every month and your minimum payments, are you in the red or are you in the green?

Starting point is 02:04:25 No, we make enough money on paper. Yeah. Okay. So when you do your every dollar budget and you plug in, you know, the 90,000. How much is that per month for you guys? So it's about, I think after everything, they give us a surplus of like... No, no, no, just the amount of your paychecks. Like $6,000-ish, probably hits your account, would you say? Should be. I make $20 or $1,200 per check. I get paid biweekly, and then he gets paid around $900.

Starting point is 02:04:59 Okay. And nobody's investing, right? No. Okay. So here's what I would say. Do the budget and do it with, I want to know exactly what that margin is going to be. And then the other number I want to know is exactly how much you are behind on today. Like what's the deficit for this month? Right now we're in August. So we're not even midway through yet. So are you already operating at a deficit or tell me how this current month looks? Well, when I did the every dollar budget, it said that we have. have about $400 extra at the end of the month. But I think it's more of a timing issue. We have heavier bills in the second half of the month. Okay, good to know. So let's do this. On every dollar, there's a paycheck planning feature because what you're highlighting, Lanaya, is really important. It's the first step to budgeting is deciding how much we're going to spend, right, and assigning the line items. But the second part of budgeting that a lot of people miss is now we have

Starting point is 02:05:56 to decide when we can spend it. And sometimes it's as simple, Lenaa, as calling in and saying, My mortgages do on the first. It might be easier if it's due on the 15th. And you can call in and make those changes. A lot of times there's flexibility as long as you're paying it that month, right? And moving things around so that, you know, when I get the first check on the 30th, that's when I pay, you know, bills one through three. And then on the 15th check, that's when I pay the majority of the other bills, right? I pay the three biggest ones with the first check.

Starting point is 02:06:27 And then I pay all the little ankle biters with the second check. And so it's a little bit of a puzzle sometimes to figure out what bills you can pay with what check. But let that be your homework tonight because I actually think that that's the solution here is knowing, okay, when I get paid that first check on the 30th, even though my entire grocery budget might be $600, but I can only spend $250 of that grocery budget on the first check. And then when the second check comes, now I can spend the other $600. You see what I'm saying? And so that's the puzzle that you guys need to. to sit down and figure out because I think you're right. There is enough money there, at least to hit the minimums.

Starting point is 02:07:04 And then when you get on that rhythm, like Rachel said, now we can feel really confident about taking the $400 in margin and chucking it away at, you know, whatever credit card or the smallest debt is. Linnea, do you know what you could sell your car for? Carvana says $19,000. That was my second part of my question is I'm having a hard time convincing my husband to let go of it. We just got it in January. It's the 2024 and he's really attached to it for the peace of mind.

Starting point is 02:07:32 I think if you guys can sell this, if you guys can do, if you guys can sell that, maybe get 12,000 for the collections and you start doing it. I think in three and a half years your life looks different. Yes. All right. There's ultimately only one way to financial peace and that's to walk daily with the Prince of Peace Christ Jesus.

The Ramsey Show - Build Habits That Build Wealth

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.