The Ramsey Show - Don’t Trade Peace for Payments

Starting point is 00:00:01 Brought to you by the every dollar app. Start budgeting for free today. Common sense is weird. So we're here to help you transform your life and your money from the Ramsey Network in the Fairwinds Credit Union Studio. This is the Ramsey Show. I'm Jade Warshaw. Next to me, George Camel, and we will be taking your calls about your life and your money. For the next couple hours, AAA 8255-225 is how you get on the line.

Starting point is 00:00:32 We've got Daniel here who's in Orlando, Florida. Hey, Daniel, how can George and I help today? Hey guys, thank you very much for taking my call. I'm sort of in a dilemma and would like your guidance on expertise right now. So I make about $90,000 a year before tax. My wife is a second year of pharmacy students with two years left in her educational. She's not working. We have $95,000 in liquid cash, $80K saving, $15 in a brokerage account, and $40,000 in my $41K

Starting point is 00:01:07 employer-sponsor account. We have $26,000 in student loans. I have about $11,000 and she has about $15,000 in her student loan. We're currently living with my parents rent-free, which has helped us save tremendously. We've been married for a year now. But my wife recently has been asking for our own space, right, for the sake of our marriage. For sure. And because of that, yeah, because of that, you know, I started looking into buying a house, a 350,000 house was a 20% down. But the conflict I'm facing on now is I'm fighting hard to keep us out of depth. Just this year, I paid about $4,000 out of my pocket for a semester of second year.

Starting point is 00:01:58 So we don't continue inquiring more depth. But my dilemma is, you know, if we purchase a house and we put down, 20%. That's our saving, right? It takes 50% of my net $6,000 net take home pay on a single income. So my question is, how do we balance saving our marriage and getting her space without trapping us into a house poor nightmare? I love that question. I think it's a fair question to ask. And I think she's in the right for wanting to have your own space. I think there's a couple of things to consider. Number one, just because you get out of your parents' house, doesn't mean you have to move immediately into a home that you've purchased. The option to rent is there.

Starting point is 00:02:42 And I actually don't mind that option because it does buy you some time and it buys you some money to save up the down payment that you want, which gets me to the second option, which is you kind of arbitrarily landed on 20%. And my guess is you landed on that because we tend to teach that. Like there was a time where that formula really worked out. It's like, hey, save up, you know, five to 20 percent down on your down payment. But we all know that the housing market has inflated to such a degree that for many folks, putting 20% down does not allow

Starting point is 00:03:16 that mortgage payment to be in a comfortable place in their budget, especially where we teach it to be 25%. And I think I heard you say that you bring in 90,000 a month. So how much, or I'm sorry, a year, how much per month is that for you? So after tax, I would say about $6,000 net take home. Hopefully I make $90,000 a month. months one day. Right. But if you do what you said you do, I mean, and this is just a guess with the

Starting point is 00:03:41 property taxes and insurance, but if you do a $350,000 house at 20% down, just looking at the Ramsey Solutions Mortgage calculator, you're going to be around $6,000 a month, which is fair to say, you know, that's half of your take home. You're going to be at $3,000, yeah, a month of half of your take home. So I think what's happening here is we've prioritized the home above all else. And right now, it's like goal number five. So goal number one, you mentioned this, I don't want to go into any more debt. I love that.

Starting point is 00:04:10 So can you guys cash flow the rest of her school? I think I can if I'm truly still living with my parents. Right. I can pay off savings. But you have, you've got a lot of cash. You said you have 95,000 cash and 80,000 in savings. Correct. So we can use that to cash flow her schooling.

Starting point is 00:04:30 But the problem is you've already earmarked it for that house. and so in your mind you're going, wait, that's house money. No, no, no, no, that is money to help us build a financial foundation. And once we get to that part of the game, now we can apply it to the house. So right now I would be working on cash flowing school, getting out of the 26K and student loan debt that you have. And then we can work on an emergency fund, three to six months of expenses, then the down payment. And then once you can get that down payment high enough to where the payment on that mortgage would be no more than a quarter of your take home pay, now we're ready. Which means in the meantime,

Starting point is 00:05:03 we need to go rent somewhere that we can afford off of your income alone, which is going to be about, what, 1,500 to 2 grand is what we're talking about here. So can you find a place nearby? Yeah, and I've been looking truly. I started looking ever since she brought those concerns up. And, you know, so, yeah, there is some available apartments to rent, which, again, I just wanted guidance from, you know, my mentor. So, yeah, it's doable, definitely.

Starting point is 00:05:32 The question is how is she going to handle that? If you go, hey, honey, listen, we're going to cash flow school with all this cash we had that was going to be a down payment. We're going to rent for two years while you finish school. Well, I think you have to, I think you have to phrase it really the way that we did, which is honey, dear, sweetums, whatever you call her. These are all the things that we've said are important to us. We care about school. We care about moving out. We care about having a house. We care about not going back into debt. But we need to prioritize those in the right order of what we do. first so that we can do them all at some point or another. And that's all you're doing. You're just taking it and you're organizing it. You're not saying that something's not important. You're not saying you don't want to do one of these things. You're just saying we can't do everything at once. We've learned here, this is a Ramsey thing. We've learned that focused intensity over time on one thing creates momentum. So what George laid out is perfect to say, okay, first things first, we got to get you out of school and we can't go into debt to do it. So that's first things first.

Starting point is 00:06:32 Second thing, okay, now we got to move out. And after that, now we got to save up. And so I think that that's a fair way to put it. And I think that if she's, I believe just listening to you that she's a very intelligent, very smart woman, I think she's going to understand that. Certainly. I mean, again, I'm putting her needs above mine, right? That money saved was prior to our marriage.

Starting point is 00:06:52 So I want to make sure that we're a team, right? So back to your question, George, I think she would be delighted. I think just having to get out of, you know, having our own. space, especially new wed, is a must, right, to continue building that foundation. But I think that's a great game plan, guys. So thank you very much for breaking us down for me. Absolutely. Thank you so much for the call. And it represents a lot of what people are feeling out there going, I want to buy home. I don't want to. I'm putting air quotes on this if you can't see me. Waste money on rent. Yes. And renting is one of these smartest decisions you can make, especially in a

Starting point is 00:07:26 market like we have right now. Yeah, absolutely. Where houses are so expensive that to go buy that same house would cost you five grand a month in a mortgage versus two grand a month to rent it. Yeah, absolutely. No one wants you to be in real estate more than us, right? We want you to be in real estate. We realize that it's a major part of wealth building. We realize it's a major piece of just stability, familial stability, and just feeling like you have your American dream, but there is a way to do it where it's a blessing and not a burden. And that's where rent shows up. Like renting, it literally is buying you time until you can buy. Yes.

Starting point is 00:08:03 So home ownership has a very clear spot in the seven Ramsey baby steps. Baby step one, $1,000 starter emergency fund. Baby step two, knock out all the consumer debt. Baby step three, fully funded emergency fund, three to six months of expenses. Then baby step three B, you save up for that down payment. Because what happens there, you've got financial peace. You got no consumer payments. You've got an emergency fund.

Starting point is 00:08:24 Yeah. Now you can move in without stress with a lot of peace. Absolutely. Here's something that keeps a lot of parents up at night. Kids are growing up with more access to information than ever before in history. But most of the content is calculated to keep them distracted, make them mad, and keep them scrolling. Not help them think for themselves. World Watch exists to be the antidote to the algorithms.

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Starting point is 00:09:56 Ramsey to get started. The Ramsey offer includes your first full month free on top of the standard seven day trial. That's world watch.new. News slash Ramsey. Back to the phone lines where we have Matthew, who's in Portland, Oregon. Hey, Matthew, how can George and I help out today? Hey, great to hear from you guys. Yeah, I'm trying to figure out a balance for my wife and I where I currently work six days a week to pay off our large debts. And we have discussed about me going back down to five days a week. And we are trying to figure out how to make that work. Wow.

Starting point is 00:10:49 How long have you been working six days a week? Almost two years now. That is a long time. And is she working as well outside the house? No. We are fortunate enough that she was actually just able to become a stay-at-home mom for our new daughter. and so she's staying at home. Cool.

Starting point is 00:11:08 Okay. And how much debt do you guys have left? We have $330,000 about all of it in student loans. Whoa. We started at $450, and in the last 10 months, I have religiously to the penny tracked every single expense and paid off $115,000 in debt. In 10 months.

Starting point is 00:11:31 You're throwing like $11,12,000 at this debt every month? every single month, attract to the penny. We've gotten two brand new cars paid off and a bunch of other small, stupid debts that we had. And all I have left, no credit cards, no nothing is just student loan debt. Good. It's plenty. We don't need it anymore. That's the good news. What's your income? I got to believe with this kind of student loan debt, there's got to be a nice, I'm hoping, a nice career with a nice income to back it up, is there? Yes. We, on my six days a week that I'm working, before bonuses or anything, it is $228,000, and at five days it would be $190,000. Okay. Okay. And what do you do?

Starting point is 00:12:15 Octometrist. Okay. Wow. Wonderful. Is there room to grow in that field? What does that look like to be making more money if you were working five days a week? Typically the place on that now, it would be based on bonuses and the exam volume that I see would be making more money.

Starting point is 00:12:35 And I've recently stepped into a manager role, and so that's what's led to the increase in the salary. Okay. You need to know what this looks like, right? You want to know how long am I in for. Have you charted this out at both work weeks? How long it would take at 190 and how long it would take at the 228 that you're at now? Yes.

Starting point is 00:13:01 At 228 right now, we would currently take about $1.30,000. four years to finish paying it off. Given the reduction in my wife's income at the five days a week being as extremist as possible, it would be probably around eight years to nine years to pay it off. Whoa. Now, what was your wife making before she started staying at home? Can I ask? Yeah, so she was a school teacher at a private Christian school,

Starting point is 00:13:28 and she was making around $38,000 a year before she became a stay-at-home mom. Okay, so that didn't like majorly set you guys back, especially when you think about child care. Okay. I'm confused how going down one day a week doubles your debt-free date. Yeah, that's crazy. It's because we got a higher mortgage payment, and if I cut down from six to five days, that is a $1,700 a month reduction in my income per month. How much is your mortgage payment? Mortgage payment. Right now, we were paying 37 for it.

Starting point is 00:14:03 Okay. The minimum payment's like 34. And, okay. And you're not investing or anything, right? It's just pure cash? Doing our 401k match and then $100 a month for our daughter for investments just now. Okay. So the good news is there's a place that we can trim to find a little bit more. It's not going to be the be all end all, but I'm guessing what's the match for or five percent? Yeah. So if we can bring that money back temporarily, because again, this is temporary and you guys are young, so there's plenty of time to get back in into investing when the time comes.

Starting point is 00:14:43 But the truth is, and I mean, you're at dollars and cents down to the dime guy. So every bit of money, you know what I'm talking about. It is going to make a big difference. So if you temporarily pause, you're investing, knowing that you're building the foundation so that later you can invest and do so with no worries with no risk, I think that's worth it for you. That's an extra $12,000 a year. So that's a full month you're gaining toward your debt-free date. And you said you're going down on income about $20,000 a year based on your take-home? You said $1,700 a month is what you'd be losing? Roughly $1,700 is what it'd be losing. Okay. So you just gained $12 back by pausing investing right there.

Starting point is 00:15:25 So now you're going, okay, there's an $8K gap. Can I do anything else to make a $1,000? up the difference because the goal is how do we keep you on this amazing momentum and not delay you by four or five years for your debt payoff journey because that's also there's hard on both sides absolutely being in debt for eight nine years is a slog and being at work an extra day every week for four years also a slog and i mean i want to encourage you you know sam and i we had major amounts of debt and major amounts of student loan debt and i'll tell you i mean i was a person i worked seven days a week for a long time, Matthew, for years. I worked seven and six days a week, and it's not fun. But there's a part of this where, to George's point, you're choosing your hard, and the time is

Starting point is 00:16:08 going to pass anyway. And so you have to ask yourself, which do I prefer? You know, when I look up in four years, do I want to just know that I'm going to be done? Or do I want to elongate this possibly, like you said, maybe not eight or nine years, but significantly into the future? And I think when you frame it like that, you just kind of go, okay, what I would suggest, and this is just a suggestion, I would suggest you continue to work the six days because you doing that is going to be better than any side hustle. You're going to earn more money from that than any side hustle could bring in. But then what I would suggest on top of the four years, because your wife is like, man, this is not what I envisioned. I want to be able to see my husband. So we need to try to meet her

Starting point is 00:16:53 where she is there and for you too. And I think you guys can do that by setting up some milestones and kind of setting up a reward-based system in this so that you're feeling not only the momentum from paying off the debt, but you're also feeling excitement when it's like, hey, for every, you know, you guys can set this up. For every 15,000 we pay off, this is something that we do together. We go on a date or we, you know, get a sitter. Like, whatever those things are that are going to make you guys feel refreshed, I think that's good. Or, you know, you're working six days a week, but you decide, hey, there's one Saturday that I don't work, right? One Saturday a month. Little things like that go a really long way. So I don't think that it's

Starting point is 00:17:33 all or nothing. I either work five days or I work six days. I think it's let's set out to work mostly six days a week. Let's make sure that we're adding in some milestones. And that way, we're making this something that we can sustain. But there's no version of this that feels easy. Right. But you told me that you can throw 11K right now at the debts. every month? That's what we're averaging, and it's surprising to me that we're able to hit it this hard. Well, think about this. I'm roughly doing that. I'm crunching the numbers right here. If you pause your investing, that's an extra thousand bucks a month now to throw the debt. You're not throwing 12K a month at the debt. You've got 3.30 left. You're done in 27 months, just over two years.

Starting point is 00:18:12 So instead of four years or eight years, I'd rather see you sacrifice hard for a shorter period of time versus sacrifice, but lay a little lower, take the foot off of gas a little bit, and it take eight years. And I'd also be interested in, is there anything that your wife can do from home? You know, she's obviously right now, if you guys have a newborn, she's in the throes of it, but maybe six or eight months from now, there's, you know, there's a little bit more mental load margin that can free up for her, and maybe that there's something that she can do from home or at certain hours per day. And again, every little bit counts towards this. Well, I wonder, what are these cars worth? You said you have two new cars that are paid off.

Starting point is 00:18:51 Uh-oh. Yep. So we bought a 2024 Kia Sportage, and I have a 2025 Honda Accord. And they are, we initially bought them for about 30 grand each a couple years, like a year or two ago. And those are part of the initial that I just paid off because of the highest interest and got it done as quick as I could. Okay. I'm just wondering, let's say you're like, man, I could shave off three months of sacrifice you can get it down to two years flat. If we sold one of these and downgraded to a different car in cash, that might be something you look into if you want to speed this up.

Starting point is 00:19:24 So there are levers you can pull. It's just you guys deciding as a couple, which ones are we willing to pull and for how long? Absolutely. And in my book, man, I'd rather be done with this sooner rather than later. Now you're making crazy money with no payments in the world. Exactly. And you can enjoy your degree.

Starting point is 00:19:39 You can enjoy your profession instead of working for the money. And I think that's the thing. When you have debt, it changes the way you work. And I want to see you being able to work because you enjoy it, because it's something you believe in, not because you have to make your next payment. 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 families' budgets. And that is why I recommend that you check out Christian health care ministries.

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Starting point is 00:21:46 He'll cover the basics of investing from mutual funds to real estate, which is really cool. Plus, all the new content on reducing taxes, George, you guys have 529 plan information, passing on character and wealth, and more. You want to say anything about that? I mean, we just started the rehearsals, and this content is stuff that we have never talked about. So it's very exciting for us to go, how do we frame this up in a way that people can take and grasp and make actionable? so that they can build wealth with confidence. Because there's so much noise out there.

Starting point is 00:22:15 So our job is to sift through it two hours each night to go, here's what you need to know, here's what you need to do next. So I'm pumped for this. You can join us from the comfort of your own home. Tickets start at $199. That's like getting coached by Dave Ramsey for $50 an hour if you're doing the math at home. Yeah, that's pretty great. Pretty incredible.

Starting point is 00:22:30 So I'll be joining Dave. Get your tickets today, Ramsey Solutions.com slash events or click the link in the show notes if you're listening on podcast or YouTube. Fabulous. All right. Julian is in Memphis, Tennessee. Hey, Julian, how can we help today? Hey, so I've been saving up for quite some time, I'm 23 years old, and I want to buy my first home. And I have an uncle who's, he's invested in real estate in the past. He was telling me I should get, my first home should be like a duplex or a triflex.

Starting point is 00:23:04 That way I could ideally have somebody else paying my mortgage. It would also be my first time buying a house. I plan on putting at least 10% down, but I know how, you know, I've listened to some of the podcast and things like that, and I know how you guys feel about borrowing money. I mean, is it a good idea to do that considering it be my first time owning a home? And then also, you know, it would be my first time investing in a real estate. I figure I killed two birds with one stone, you know, by trying to do this. So I had a guy, Dave and I were hosting together a week or so. ago and a guy called in and he purchased a home the correct way where the payment was no more than

Starting point is 00:23:45 25% of his take home pay. And he was able to cover the entirety of the mortgage on his own, but he then had a couple of roommates that came in and rented rooms and paid him. And we praised him because we thought, hey, this is great. That's a smart move. And then he took that money that he got from the rents, was going to save it up and use the money to pay off the house and then buy his next rental. That was his plan. So there's a way to do this that I think is smart, especially if you're young and single and you have the money to be able to afford this on your own. I do worry, and I mean, George, I don't know how you feel about this, but the duplex and triplex, I do worry a little bit about that just because it's a lot. And those tend to not be in the greatest of areas. And so that's the

Starting point is 00:24:35 part that gives me a little bit of an orange flag on there. So I want to know more about your numbers. I want to know what you want to spend and what money you actually have. So I got like around 70,000 saved up. I've been saving it for quite some time. I have no other debt besides a vehicle payment that I purchased about two years ago back in 2021. What's left on that? And 9,000, well, 9,700. Well, 9,700. Okay. And what do you make? debt I have. About 85 a year. Awesome. Okay, so all the cashier name, 70 grand, is what we're working with here. Yeah, and that's, yeah, and that's just the cash. I mean, that doesn't include the other investments that I have. I have two rough IRAs and I have a traditional. Fantastic.

Starting point is 00:25:22 And do my employer. I got a fuller one. And what makes you want to become a landlord? Just a passive income. I mean, I've read some of you, you know. You ever have your tenant knock on the door that's next to yours to say, hey, toilet's busted. You got to fix that? I haven't yet. You got to stop the party next door because you can't sleep? You know, I've considered it.

Starting point is 00:25:48 I mean, I haven't. Well, that's, I haven't experienced it yet, but, you mean. I hope you don't. But I'm just saying that's the reality because what your uncle's doing. and what you see on TikTok is a bunch of guys saying, here's the path to wealth, just get a multiplex, and then do that 17 times,

Starting point is 00:26:06 and all of a sudden you're a bazillionaire, and it just never works like that in reality. And the reality is, Jay's right, these don't go up in value the same as a single-family home. They tend to be in rougher areas, and I don't want you biting off more than you can shoe just so that you're, quote-unquote, they pay the mortgage. Now, if I were your shoes,

Starting point is 00:26:24 I would follow the blueprint of the gentleman that called earlier. I'd say, okay, the primary point here, is you need a place to live. So what if you bought something that had two or three bedrooms that you could afford? I'm not saying the $70,000 is going to get you there just yet, but this is just as dreaming. What if I bought something that was two or three bedrooms? And I know a couple of guys. These are people who are reputable that would rent a room. And even if they don't rent it, I can still afford it. But this is an opportunity for my, for me to just kind of get my feet wet and what it feels like to own something of my own, what it feels like to collect rent. Do you see what I'm saying

Starting point is 00:26:58 what it feels like to fix something that's broken in the house. And then later on, if you save up cash because you've got people paying you, once you pay off that mortgage, because it's going to be, you know, nothing crazy, you know, as modest as possible, then maybe you can start saving up for another piece of real estate, right? And we're kind of doing this slowly in a way that is serving you and you're also able to learn from the situation that you're creating. You're not just jumping, you know, 10 toes in on something you've completely never done before with a triplex. in a neighborhood of town that you're having a hard time finding great renters. You see what I'm saying? Yeah. Yeah. So if you want truly passive income, an index fund will do that. But if you're telling me,

Starting point is 00:27:39 you love real estate and you want to get into it, you want to become a landlord, that's a different story. So if you're going to do this, then make sure that this works without the tenant there, that this payment is no more than a quarter of your take-home pay, 15-year fixed-rate mortgage. And before you do any of that, you're paying off the car today. You're setting aside an emergency fund for yourself, three to six months of expenses. For you that might be 30 grand. Now you're left with 30 for your down payment. And now we can continue saving for the next year and start looking and look for a house that you'd actually want before you just go looking for an investment slash a place to lay your head. I wouldn't try to combine the two at this stage of your life. Okay. Are you going to

Starting point is 00:28:19 get married anytime soon? Not yet. No, probably another two years or so. No. Okay. That's to think about if this is a long-term decision you know nice gal comes your way i don't know that she wants to live there she might have her own idea of what her single family home or whatever town home looks like and so i would just tread with caution um with an uncle saying dude you got to do this i made so much money it's always an uncle or a brother-in-law so uh you're doing great like all things considered to be your age and have that much in cash and now debt-free after this call is over because you're about to pay off that car loan, you're doing so good. So I would stay on the path and I would avoid TikTok real estate videos.

Starting point is 00:29:03 And that's what's going to get served up to you now after we talked about this. That's right. That's so true. And I just want to say this because, you know, I don't want anybody to walk around, you know, with a bad taste in their mouth. Like, Jade and George, they don't like real estate. We do like real estate. And I particularly think that when you're this guy like this or a lady, you're young, you're unattached. You don't have kids.

Starting point is 00:29:25 that is the time where you can try things, where you can do things that you maybe wouldn't be able to do, you know, 10 years of marriage in. I don't want to have roommates in the house at 10 years. You know what I'm saying? So he's in a phase where he can play a little bit if he does it the right way. And I think that if he does this, it's a fair way to kind of get into maybe, do I like renting? What I want to live near, because here's the thing, if you don't want to live upstairs from your boy, like your friend, you certainly aren't going to want to be due to. duplex neighbors with Trevor, you know, who you've never met before. So like, I think that's just a really great way for him to dip his toe in and see. And to not leave him hanging, I'm going to give you a free ticket, Julian, to our Investing Essentials virtual event next week. And night one, the second part of night one is all about real estate investing. And Dave goes through. Here's all the different categories. He's all the ways to do it. Here's all the formulas you need to make sure that you're making a wise decision. Because this is the biggest decision you've made so far in your life. So we don't want to jump into it just because we see one, it might not be a deal. It might be way overpriced,

Starting point is 00:30:29 and you can't get a tenant to rent there for what you want for it. And now all of a sudden, it's not paying your mortgage. And then you need to sell it. And now you're messed up because maybe you didn't get a good deal. And now maybe you're not even getting what you sold it for. So hang on the line. Christian's going to pick up. We'll make sure we get you a virtual ticket to that event. And the rest of you can join us. Ramsey Solutions.com slash events. We're pumped for it. One of the biggest mistakes homebuyers make is talking to a realtor and shopping for houses before understanding their real budget. And that's how you end up falling in love with a house you can't afford and trapping yourself in a bigger payment than you can handle. That's why you

Starting point is 00:31:42 should talk to Churchill Mortgage first. Churchill shows you what you can actually afford, not just what a bank will approve. And with their certified homebuyer program, your financing is completely secured before you shop, so you won't miss out on your dream home while you're waiting for pre-approval. I've recommended Churchill for 30 years because they help you buy a home the Ramsey way. So here's your plan. Contact Churchill. Know your numbers. And then when you find the perfect house, you're ready. Go to Churchillmortgage.com slash Ramsey offer for a special offer only for Ramsey fans. That's Churchillmortgage.com slash Ramsey offer or click the link in the description. All right, our Ramsey show, Question of the Day, is brought to you by Y-ReFi.

Starting point is 00:32:41 MIST private student loan payments can leave you feeling like your financial goals are on hold. YREFI helps borrowers explore low, fixed-rate refinancing options that fit your budget so you can move forward with a plan. Visit yrefi.com slash Ramsey. Remember, it may not be available in all states. Today's question comes from Olivia in New Mexico. My husband and I have experience in both residential and commercial property management as well as in real estate. Instead of contributing to our IRA and Roth, can we purchase investment properties and consider paying off those mortgages as part of our 15% towards retirement? Or as the Baby Step 4 rules specifically that your 15% for retirement, the only cash that goes into an investment account. That's a unique question. I love the question. I've gotten that directly. Well, here's a deal. Dave Ramsey loves real estate. He's got to. a whole lot of it, and it's sort of accidentally a huge part of his net worth, comparatively to his investments, because of how well he did at the time he bought it.

Starting point is 00:33:38 So he has both. He always recommends diversifying. And so because of that, I'm going to do both. I'm going to invest in the IRA, the Roth, do 15% there. And any extra money outside of that, you guys could use to purchase that next investment property in cash. But paying off the mortgage does not count as part of your 15%. Even though you're building equity, it's a part of your wealth building journey.

Starting point is 00:34:03 We want to make sure that we're investing for the future in a lot of different ways. And real estate income can be a great source of income in retirement. But I would love for you to have a nest egg on top of that, too, especially because of the tax advantages. Yeah. So both and. I like that answer. I concur. All righty then.

Starting point is 00:34:20 Kimberly is in St. Louis, Missouri. Hey, Kimberly. You're up next. Hi. Yeah. What's up? I'm so excited. You have no idea what this means to me.

Starting point is 00:34:29 Like, I have listened to this show for years. Well, we're honored. Yeah, we are. How can we help? Hopefully, I don't want to screw this experience up for you. I know. I'm very nervous now. Well, I hope not.

Starting point is 00:34:38 I mean, I'm in a very good, I'm in a wonderful place because of you all. So thank you for that. Awesome. I love it. My question is, is it ever okay to have, like, more than your annual salary in wheels and motors and toys? I lost my mother. a little over a year ago. And she, we have always driven like no one else so that someday maybe we could drive like no one else.

Starting point is 00:35:04 And she always said when she passed away, she wanted my husband to have a new truck. Well, we waited a year and we finally did it. But now I feel guilty because we have so much money tied up in motors and wheels. How much did you spend on the truck? $75,000. In cash. Yes. And what do you guys earn?

Starting point is 00:35:26 We earn about 130. A year. Yeah. But we have a lot of other things. What does everything add up to with wheels and motors? $181,000. Oh. So you guys like toys.

Starting point is 00:35:40 You're going to have to go down that list because we want inquiring minds want to know. Dark curiosity. Are there boats, four wheelers, RVs? Well, part of it, a big $45,000 of it is a tractor, which was also basically part of our inheritance from her. So you guys didn't buy that. Let's just count the stuff that you guys paid for. No.

Starting point is 00:36:00 So minus the 45 is all we get to take off. So 145. 100. Yeah. Okay. 135 or so is what you guys are. I mean, we have seven cars. Why?

Starting point is 00:36:14 My husband is a car collector, I guess. No, he's an addict. Well, they're like town and country minivans that we bought years ago that he just keeps driving. He's driving a 2013 town and country minivan with 300,000 miles on it because he just doesn't want to. So what about the other six cars? My vehicle's worth about 25. Okay.

Starting point is 00:36:40 Yours is reasonable. We'll keep that one. Yes, we have the work van, which is only worth $1,200. Okay. We have another minivan that we use when we travel. This worth maybe six. We don't need that. So he has a very old truck that he used.

Starting point is 00:36:55 that he uses on the farm that's worth maybe a thousand. Okay. And then our daughter who is in college at the moment, we own her car and we pay, it's worth about 15, I would say. Okay. That still feels like a far cry from your... 130. Yeah.

Starting point is 00:37:11 You got yours at 25, his truck's at 75. That's already 100 right there. Yeah. Yeah, that's 100. Okay. Where are you guys at in the baby steps? Do you have any debt? No, we have no debt.

Starting point is 00:37:21 We've been debt-free for quite a while. Awesome. And I think what happened is our net worth changed quite a bit overnight when we lost my mother. So that was a big change for us. How much did you inherit? We inherited the total of the estate was $2.1 million. Wow. And so what's your net worth today as it stands?

Starting point is 00:37:44 3.1. Fantastic. Wow, what a legacy. Yeah, she did do good. I mean, we were just at baby step millionaires when she passed away. But, I mean, all but about 40,000 of that was tied up in retirement in our home. So it wasn't like we had a lot of money at our disposal. And your mortgage is paid off today?

Starting point is 00:38:05 Yes, our mortgage is paid off. It's been paid off for about four years. So you're worth just the invested portfolio is $3.1 million? Did I understand that correctly? There is like one point, including our home, there's like $1.6 million in real estate. Because I'm also thinking about, you know, when the day comes that you retire. I don't know how old you guys are, but I'm also thinking about what you would draw off of that nest egg. I'm kind of fudging a little bit and maybe thinking through some of that as well.

Starting point is 00:38:39 And how old are you two? We're 55. Okay. What's the goal for retirement? We would love to retire now, but obviously that's, I mean, our financial planner says it is somewhat possible because we inherited like a $1 million taxable portfolio. So you could use that as a bridge account you're saying until you would access retirement? Right, right. But the caveat to this, and part of the reason I think I feel guilty for the truck is we have a daughter who's in her senior year of undergraduate, which is all paid for.

Starting point is 00:39:08 She had a full ride scholarship. Good. I'm just going to say this, though. I'm just going to say this, though, because I think it's, I think it is what it is. You don't feel good about the truck. And even though this person who you love so much said, I would love for your husband to have a truck, she didn't say you had to pay $75,000 for it. She just said it would be nice for him to have a new truck, right? Correct. So for that reason, for those two reasons, I'm going, we implied $75,000. You guys implied that. And you have said, these principles matter to us. And now we're feeling it. And because of that, I think that you're inclined to do something about that. What would it look like for him to go, I maybe don't have a $75,000 truck, but I sell this and I get a $40,000 truck. And now I have this nice chunk of income to go towards my child's education, right? I think there's something there that might give you a little bit more peace, but also, you know, preserve the memory of your loved one.

Starting point is 00:40:08 Do you see what I'm saying? And also give you guys peace at night. Yeah, and I think that's kind of why I hem-haw about it, and I'm like, you know, Dave, I always have heard him say, you know, if you put this money on the table and lives on fire, would it affect you? I don't know, because you're saying it will. You just, you laid out some beautiful ways that it is affecting you. Yeah, I mean, I guess mentally emotionally affecting me. Well, the fact that it's affecting you is worth bringing up to him going, hey, what can we do to solve this? Well, one solution is we sell all these dang cars sitting out in the yard looking like a junkyard. looking like a junkyard, and he downgrades to a $40,000 truck, you keep your $25,000 car, not because it's in the Ramsey parameter.

Starting point is 00:40:48 Now you've been absolved of your sins, but because it's not a part of your value system. Yeah. Yeah. And so it's more about that than anything else. He didn't drive for that truck. You know, I kind of, I guess I sort of pushed him like, this is something my mom was very adamant about. I mean, she always, all the time, said, I want you to do this. What was the heart behind that?

Starting point is 00:41:10 I'm sorry, what was that? What was the heart behind her wanting him to have a new truck? Because I feel like he grew up very poor as a child. We've been together for 40 years. So he is basically her kid. I was an only child. And I think he had always, we have always driven junk, older vehicles, Dave cars. He still does, it sounds like.

Starting point is 00:41:33 It does. And she just said, that boy needs a really, I want him to have, and she did say, I want him to have a really nice truck. A $40,000 truck is a really nice truck. So she didn't say he needs a brand new $75,000 truck, just something that isn't a piece of junk. And we went to the furthest part of the spectrum to go, all right, let's go to the dealership and hand over a nice big fat check. Yeah, listen, if you were to keep this truck, if you were to keep everything exactly the same, your world is not going to implode. But since you called and since you really do seem to be bothered by a purchase that you made, it sounds like you have a little bit of buyer's remorse. It's living in your head rent free.

Starting point is 00:42:09 I think it's time to evict the truck and move to something a little bit more reasonable and you'll sleep better at night. Absolutely. A lot of banks are happy to hold your money. But Fairwin's credit union helps you make progress. 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 Fairwins. Their smart bundle gives you up to 10 free high-yield savings accounts to help you stay organized as you say for different goals.

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Starting point is 00:43:37 Well, welcome back to the Ramsey show in the Fairwinds Credit Union Studio. We're headed right back to the phone lines because we have Timothy, who's in Newark, New Jersey, on the line. Hey, Timothy, how can we help out today? Hey, guys, how are going. Thank you so much for taking my call, big fan of the show. Moral question for you guys. I bought a two-family home with my sister quite some time ago, and unfortunately, I had to take legal action to sue to get out of the property. My question is, we don't really speak anymore, and we were super close growing up.

Starting point is 00:44:09 Would you guys take any action to try and mend that relationship or leave it alone kind of as it is? Why did you have to sue her? How did it even get to that point? So my sister and I bought a two-family house that we both lived in together and rented out another side. and I wanted to get married and start a family and didn't exactly want to be responsible for being a landlord anymore, doing the credit checks, fixing everything that was wrong with the house. I brought my own single family house

Starting point is 00:44:37 relatively close in the same general area. And we had conversations about me trying to get out of the house, didn't want to be responsible for it anymore, and she refused to sell it, either put it on the market or buy me out of it. Was it because she was living there or she needed the income from the tenant? She was still living there. So it was another daughter a side by side. She was living in one side, renting at the other side and collecting rent.

Starting point is 00:44:59 And she told me that she either couldn't afford to move out, didn't want to. Wasn't overly. And you guys had no agreement about what it would look like to force the sale or to when and if we're going to sell. Oh, we did. When we first bought the house, again, it's a brother and sister. So it was more of a verbal agreement that we're only going to stay here for a couple of years until we figure out what we were going to do with our life. We brought it super young. I was 24 at the time.

Starting point is 00:45:20 She was 26. So just kind of buying our first house, figuring out how things were going. This was going to be temporary. The plan was for both of us to eventually either move out, sell it or rent it out, and start our own lives and our own family. So the communication was terrible. So far it's been, well, we had a verbal agreement. It was a couple of years. Eventually we were going to.

Starting point is 00:45:40 And so that's all part of the chaos. How many years did it last? We lived in that house together for about five years. Okay. So that feels like it suffices for, let's try this for a couple of years. and you took her to court, obviously she hasn't spoken to you in a year now? About a year. And you want to remedy the relationship?

Starting point is 00:46:04 I do. Is that the goal? Again. Do you have any way to even get in touch with her, or she, like, blocked you, no contact. There's no way to even have a conversation? So I'm the younger sibling, so that's my older sibling. I don't exactly know how to approach it. There's no blocking.

Starting point is 00:46:20 I don't believe so, but once attorneys got involved, everything went just through. attorneys. So I don't even know how it would go about it. But you guys live near each other? We're in the same general area, a couple towns away from each other. Like, could you send a text and say, hey, would you be willing to meet up and get coffee next week? You think she'd even respond? I don't think that she would. Okay. What if you just, I mean, you could try a couple of things. You could try writing a letter or sending an email. You could try calling her. You could try calling her. and just cold calling her, you could try leaving a mess. Like, there's so many things that I think you could do, and I think of everything.

Starting point is 00:47:01 Let me ask you this. I don't think so, but do you owe her any apologies, or this is simply, I want to find a way to repair our relationship? Is there like an apology owed, so, or no? Yeah, if anything, there is, and I'm sure that most people on my side of the argument would say this, if anything, there's an apology that's owed by her to me, I'm, be more understanding of the sibling. She's very stubborn and way more intellectually smart than I am. So when she thinks she's right on a point, it takes it full bore.

Starting point is 00:47:34 I actually gave up a lot of things in the sale of this house. I didn't collect rent for the two years that I owned that house. I wasn't living there. I let her keep it all. I let her do a mortgage assumption. So she kept the great rate that we had on that house when we first bought it. I didn't make her, you know, listed on the market. I actually took less money after we got all the appraisals back for the house.

Starting point is 00:47:51 So if there's any way that owed an apology, I feel like it would be me. but it's still one of the only family members that I have left. So I would like to have a relationship with her. And my first son was just born six months ago, and I would like for him to know his basically only family. So I don't know if this is, that's kind of the catalyst of it. And then now the dust settles got past him finally sleeping through the night and have had some time to actually think and breathe,

Starting point is 00:48:13 and I would like him to know who his aunt is. But how do you mend a relationship with somebody? I think you do. I think you're the one that's an apology. Yeah, maybe you are. but I think that what you're saying outweighs that, right? This is the only family I have. I have a baby in this world and he should know his aunt, right?

Starting point is 00:48:31 All those things outweigh who owes who an apology, I think, at this point. So I would kind of come hat in hand and I would say, I'm so sorry this happened to us. We were, we set out to try to do something and it created this rift between us. And I hate that. I love you. You're my sister. I want you to know my family. I really hope that you would consider,

Starting point is 00:48:55 I would love to repair a relationship with you. It's going to be hard for anyone to turn that down. The extra layer that I don't think that she would be willing to is that she is also an attorney and was representing herself through this entire ordeal. So I think there's an extra layer of cynicism on her end. Because she didn't have the filter that you had. Correct.

Starting point is 00:49:19 Okay. And you technically won the legal outcome. I did. She assumed the mortgage. I got paid half the equity that was in the house, which, I mean, that's a whole separate idea. I don't know what the difference again. But yes, you can only do what you can do. You can't force her to be open to this, but what you can do is start just planting the seed and be persistent, but also, you know, reasonable. You don't need to be knocking at her door. Like, answer, we got to talk. But I would just say, hey, I miss my sister. I want my sister back. I know what happened, happened. That's water under the bridge. I just want to be a part of your life. I don't want us to not have a relationship over something that happened a year ago on a business transaction gone wrong. You can also ask her to like quantify it and say what would you need? What must be true for us to have a relationship? Yeah, what would you need for me for us to be able to move forward? Maybe she feels like she's owed an apology because sometimes, you know, everybody perceives things differently and I'm not saying I honestly can't judge who's right or who's wrong on

Starting point is 00:50:15 this and I for me it doesn't matter. But if she perceives that she's owed an apology, sometimes, listen, and if you're married, you know this. Sometimes you just have to apologize, even though it wasn't on you. I apologize to my wife every day. Come on, man. Just to sort of cover the sins of the day. When you get out of bed, I'm sorry.

Starting point is 00:50:32 And then you just go on with your day. But you see what I'm saying, Timothy? There could be something there. If you know, if you happen to know where she feels she's owed an apology, even if you're like, man, I'm right. Like, I did it. It could be worth it to say, I'm sorry, for X, X, Z. It could be worth it.

Starting point is 00:50:51 And if not, if you truly don't know, just ask her, what would it take? I really want to know what it would take to be back in your life. I miss you. I love you. We've got X amount of years history. We're the only family we have. Gosh, I would love to make this right this year. Just please let me know what I need to do.

Starting point is 00:51:07 And she sounds like a tough nut to crack, but you can try. But the key is you go first, you put the ball in her court. Yeah. And at least then you'll sleep better at night knowing that you made the attempt. and whether it's reciprocated and there's some healing, that's not in your control, unfortunately. And at the very least, I mean, who can resist a picture of a cute baby? That does help.

Starting point is 00:51:29 That's a very good point. But my other concern would be, how do you even find it to forgive somebody when they put themselves between you and your new family? Now there's... Now, there's the part. That's the part. That's the part.

Starting point is 00:51:41 And I think that... Your own bitterness and resentment, that can get in the way, for sure. I think that you may need to deal with that, Timothy. before you come to her. Otherwise, you guys are going to start arguing. It's just going to come out eventually. Uh-huh. And it's going to close the door once again.

Starting point is 00:51:56 Uh-huh. So get with the counselor. Make sure you work through your side of this and that you're truly okay. And then extend the invitation so that you know that on your side is water under the bridge. When you take your car to the shop, you're probably thinking two things. How much is this going to cost me? And is it going to get done right? What you need is a mechanic who will give you transparent information, so you can make the best decision for your car and your wallet.

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Starting point is 00:53:47 and we work too hard out here, George, to feel like, you know, you go to work nine to five and you make your money and you pay your bills. And it's like to do all that, to give your time, to give your sleep, to give your effort. And at the end of the day, it's still just treading water. It's just never enough. I just worked all week just to satisfy bills and payments to lenders. It's terrible. There's got to be a better way.

Starting point is 00:54:12 There's got to be a better way. And we found it, you know, we found that when folks start budge, it is like their whole world opens up. The skies and the seas part. Yes. You can see the light. You can actually see where your money's going and most people are shocked to find like, oh my gosh, I had no idea. I know for us when we started budgeting, it was kind of a scary time because we realized, all right, no wonder we're going into credit card debt. We're in the red every single month. But even having that realization, so at least you know what the problem is so you can start to fix it. And other people have realizations where it's like, oh gosh, I had no.

Starting point is 00:54:47 no idea we were spending that on going out to eat. I had no idea that we were spending that on groceries and just having that insight. And I had no idea how much margin we could have with a few simple tweaks just by paying attention. I mean, I did a media hit the other day and we were just talking about ways to find margin. And I mean, it really is simple things. Most folks don't realize how much they're paying every month in subscriptions. But when you get into every dollar, which happens to be our budgeting app, when you get into every dollar and it makes you go line by line to fill in everything. That's when you start to go, okay, I've got Hulu, I've got Netflix, I've got Disney, I've got Paramount Plus, right? And surely you can cut one of those, you know,

Starting point is 00:55:27 that's when you start tracking and you start looking and going, oh my gosh, we've gone out to eat or we've door dashed in three or four times this week. If you just cut like 10% in each category, that could be a thousand bucks you free up. Absolutely. And I mean, that's true. I mean, most folks, I've been here for four years, and it's shocking to me how many people tell me they feel like they got a raise simply because they started budgeting. And so, I mean, I would suggest it. When you guys hear us take calls and we help people and we send them every dollar, we're sending them that because every dollar is the basis of everything we teach.

Starting point is 00:56:00 Having that budgeting tool that's not only there to help you do a budget, but it's also reinforcing the plan that we teach. Guys, it's the most important thing that you're going to do when you start working this plan. So make sure that you download it. You can start it for free. It's in the app store. It's on Google Play. Please get a copy because that a copy.

Starting point is 00:56:18 Wow, you're aging yourself. Man, I know. I just turned in. Be kind. Please rewind as well while we're at it. It's an app. And my point is go ahead and go download it because it's going to change your life if you let it. All right.

Starting point is 00:56:29 Justin is in Baton Rouge, Louisiana. What's up, Justin? Hey, how y'all doing today? Excellent. Yeah, thanks for taking my call. So basically, I'll be 40 this year. And honestly, I never really considered retirement most of my life. I've always believed and, I mean, I still do that Jesus will return soon.

Starting point is 00:56:51 But, of course, I don't know that. I don't know when that will be. So if it happens to be 30 or 40 years from now, I don't want to be 60 years old, 70 years old climbing around addicts. So once you started listening to y'all this year, we did decide to open up over, I think, about two weeks ago, we decided to open up a Roth IRA, and we just went ahead and maxed it out. So we just went ahead and put $7,500 in there. Okay.

Starting point is 00:57:17 Since we haven't done anything. You went $0.60. I never put anything in retirement. What's that? Yeah. You went zero to $60 real fast. I love it. Yeah.

Starting point is 00:57:25 And then me and my wife, we talked about opening up, now she's 31. So we talked about opening up her one, but we haven't done that yet because I know, I mean, I'm assuming it won't let me put any more than that. and 7500 in there since that's the max. Well, you each can have one. Right, yeah. So that's what we were thinking about doing, which is opening up per one also.

Starting point is 00:57:46 But the main reason for my call is whenever I open it up, I just put the whole 7500 into the SMP 500 because we hear y'all talk about that one a lot. And then after we did that, we were thinking, okay, well, you also mentioned about putting it across four different

Starting point is 00:58:05 types of investments, but I know so little about retirement or investments that I'm not sure, like, what the best resource is to find out what mutual funds we should put our money in and what are the four different groups are. I know one of them is international. And then the other three, I don't remember. One was aggressive growth. I guess there's an end of like a long-term growth. Yeah, there's aggressive growth, growth and income, growth, and then you've got your international. So let's talk through this.

Starting point is 00:58:34 I love that you're asking this question because a lot of people out there. it is confusing and there is a level of financial literacy needed to make sure that you understand what you're investing in and not just do it because jade or george or dave said to and so the s mp 500 is the top 500 u.s companies by market cap and so that those would be large cap companies so those would fall into the sort of growth and income category they are they're pretty stable they're huge they're like a cruise ship then you get into the growth category which is going to be more of your midcap companies so what you're missing out on right now is you're missing out on right now are the other three categories of funds, mid-cap, small-cap, and international.

Starting point is 00:59:12 So you can do far worse than the S&P 500. You can become a millionaire, multi-millionaire, just by investing in the S&P 500. What we're recommending is diversifying even further than those 500 companies by saying, hey, we're going to not just get the large ones, but those little ones, the medium-sized ones, the international ones, so that over the course of time, it's all going to balance out. And you might get some great growth off the small ones over the long haul, some great growth off of international and the U.S. markets are down and you'll be better off in the long run. But either way, you're doing a good

Starting point is 00:59:41 thing. You're not investing in a single stock or crypto. So nothing wrong with what you got going on right now. And I'll gift you a ticket to our investing essentials event because what we actually do, Justin, Dave and I are going to look at sample mutual funds in a 401k and help you understand how to go about using the process of elimination to find the four that makes sense. And we do it in two minutes. So Dave, we literally did the rehearsal yesterday and Dave went, well, you could have done that and still had time to go eat lunch. It doesn't need to take three hours of Googling and researching different funds. You're looking at a few key pieces like long-term return, the expense ratio, the type of fund. And so we know, hey, if it's a bond fund, we don't want a bond fund. If it's a target date fund, we don't want that. So now you've already ruled out half the funds in your IRA or 401K. But the IRAs, you have options to the moon because you can choose any investment under the sun, which can be more overwhelming. Yeah, whenever I was looking at them, I'm sorry, go ahead. No, no, no, you go ahead.

Starting point is 01:00:39 I was just saying whenever I was, we opened it with Charles Swab, and whenever I looked at it, I searched for the S&P 500, and then I just looked at the market, and I literally, it could have been Chinese to me. I literally had no idea what I was looking at, other than just looking at the trends of them, but I would be scared to death to put my money in something that I didn't understand and had no idea what it was going to do, which I know you can't necessarily predict that. But after listening to y'all and hearing about the S&P 500, that's what we were like, okay, well, we feel comfortable putting our money in that.

Starting point is 01:01:11 But then we would still want to, if I've only got about 20 years of investment, 20, 25 years, to do that for me, I would want to spread it across all four of them to the best of my knowledge where it's going to be the best return on investment. Well, the good news is I think you're going to feel a lot better about, about select, knowing how to select those funds after the event. And if you still feel like, hey, I need a little bit more help. You can get with a smart fester pro and they'll help you understand it. And they'll make sure that they're guiding you in the way that we teach around here,

Starting point is 01:01:44 the Ramsey way. So I would definitely make sure to hit up that event. And again, if you still have questions, get a smart vester. But the one thing I might tweak is, you know, we always teach over here 15% of your gross income. So kind of just landing at I'm just going to max out of Roth, there might be more ways that you can invest. So I would challenge you to say, okay, well, what's 15% of my gross income? And can I invest that every single month? But the good news is even if we just plugged in the work that you've done, the 7,500 that you've already invested.

Starting point is 01:02:18 And let's say that next year you did the same thing, but you just split it month by month. We got the calculator up right now if you're watching on YouTube or Spotify. You can actually see Jade's using the calculator live to walk through this. So again, I'll just go through it real quick. The 7500 you've already invested for this year, but let's say next year you start breaking it out every single month, 625 a month. And let's say you do this until age 65. At 11%, which you would hope to make that even, you know, just in an index fund.

Starting point is 01:02:45 I mean, if we calculate that, that's over $1.1 million for you and your family. That's just your account. If you do nothing else, you never get a raise, you never invest more than that. And so I want to encourage you that you're doing great. You're doing better than you think. And you don't need to be a prodigy investor to have wealth. You just need to invest consistently into the right things and not overthink it and jump in and out. As a frugal guy, I am always looking for entertainment that is worth what I pay for it. And that's not always easy. But Angel's newest movie definitely passes the test. It's called Runner. And it might be Angel's most action-packed movie yet. It's a buddy comedy about a former soldier teaming up with an unlikely partner to get a healthy liver to a healthy liver to a sick girl in desperate need of a transplant. But if those stakes weren't high enough, the cartel is after them too. Runner stars Owen Wilson, my favorite Wilson brother, and Alan Richson, who's best known for playing Jack Reacher. It's got action, humor, heart, and as previously mentioned, a liver. And if that

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Starting point is 01:04:52 Alrighty. So George, you know, that call that we just took with Justin, it really does bring up a bigger teaching point that I think it's important to hit, which is a lot of folks feel like it's too late to start investing, but we just saw with Justin, hey, even if you're 40, you know, yes, he's going to invest $625 a month, but he still has the potential to be a millionaire. $1.1 million is what our calculator showed. But there is a benefit that if you can really capture what it is that we teach, the earlier, the better, right? I mean, obviously the quicker that you can start taking advantage of compound growth, the better for everybody. So let's rewind in the in the words of share. Let's turn back time. I love it. What if Justin had started at 21 years old,

Starting point is 01:05:38 right? So 21, no debt. Maybe you already have just $1,000 in investments, just like he had. He had $7,500. But now you've got 46 years for this money to grow, right? You've got a much longer a time frame and it's not going to cost you as much of your own personal money to build the same $1.1. In this case, $1.8 million of growth. It's pretty incredible. You want to crunch the numbers live? Yeah, I'll crunch the numbers live. So again, I really love this calculator and I would suggest it for anybody. It doesn't matter what your age is, but it's really great to kind of get on there and just play around with your life. So let's pretend there's already $1,000 of growth. Maybe it was a money that your grandma gave you, whatever. You got $1,000 there. So let's start there.

Starting point is 01:06:25 Now, if you're 21 years old and you just say, you know what, I'm going to put around $100 in here. That's $1,200 a year. I mean, that's nothing. We can all find that. We spend that on subscriptions every month. Exactly. Or DoorDash. We're going to have it grow for 46 years because this person is going to retire. So 21 to 67. Yeah, to 67 years old. And again, I'm going to keep it at 11%. That's a fair. I mean, if you go and just look at average annualized rate of return for S&P 500, you'll see that 11% is a fair rate of return. And if I calculate that, oh my gosh, 1.8-2-3 million. Let's point out something way more interesting. Pull that back up on the screen.

Starting point is 01:07:00 Yeah. The actual contributions made to get to $1.8, $56,000. That's bananas. But if we go back in, let me go back and put back Justin's numbers in. So he had, we'll start with $1,000. and we'll put in 625, and then we'll say he only had 20 years. Yep. He had 25. He was 40 years old. That's right. 25 years to grow. If we calculate that, he's at a million, but look what he put in.

Starting point is 01:07:28 $188,000 was his contributions. The rest is compound growth. And that's what we found. In our millionaire study, their retirement accounts wasn't a million dollars they put into it. That's right. Most of that, 80 to 90 percent of your nest egg in retirement will likely be compound growth. Absolutely. So it's up to you to do the first 10 to 20, but the more time you have, the better, because every dollar goes a whole lot further when you're young. And so this is not a knock on those who are older and don't have anything saved. It's just to show you that we better get on it. And there's no time like the present because waiting until tomorrow is worse. Yeah. And so we've even got a chart that kind of shows you at the different ages.

Starting point is 01:08:05 And if you're watching and you can see this, go ahead and screenshot it because it's so helpful. You know, if you're age 20, what you put in. If you're age 25, what you can put in. And now this chart is, you know, using a 10% rate of return, so it's 1% off. And this is, hey, how to become a millionaire at every age. So by 67, what does it take to go from age 20 to age 67, 80 bucks a month? Now, if you wait until 25 to get started, it takes $130 a month. You wait until 30 years old, takes over 200, so on and so forth. And then you get to 45 years old.

Starting point is 01:08:36 If you have nothing saved and you want to have a million dollars in that nest egg by 67, you need to contribute $1,000 a month to get there. So it just shows you, man, if I had done this 20 years ago, I could have just invested 80 bucks to get there. It would have been easy work. And if you are 40 or you are getting a later start, it's still possible. The chart still shows you. It's possible. You just got to have a little bit more cash to put in the kitty.

Starting point is 01:08:59 So, guys, if you're interested in this, again, go ahead and pull up our free investment calculator. It's so helpful. I'll drop a link for that in the show notes, whether you're listening on podcast or on YouTube. It'll be there for you. So that's super fun. I find it to be motivating, George, me, myself. I just like to see it. Especially if you've got younger kids at home,

Starting point is 01:09:19 teenagers, you show them the power of that. Now they're going, you know what? I was going to go wasted on more clothes at the mall, but I'd rather open a rough IRA because I'm working part time. I want to see that money grow for me instead of see it disappear. And that's what I did when I was 18. Every paycheck was gone. Usually at the place I worked, I worked with urban outfitters. How many more skinny jeans did I really need? I did that. I worked at New Yorking Company. Yes. But I had a nice wardrobe. Oh, yeah, you're looking good. All those clothes are gone now. I'm broke, but I sure look good in those skinny jeans. Oh, man. I know it.

Starting point is 01:09:52 Well, download the calculator or just use the calculator. It's really, really going to help you. All right, let's go back to the phone lines where we have James and Charlotte, North Carolina. Hey, James. How can George and I help out today? Hi, there. Yeah. My question for today is when my work has become kind of exceedingly stressful,

Starting point is 01:10:14 but I feel like I've saved a lot of money, is it crazy to take like a 70% reduction in my salary to do like a barista style approach to find a little more purpose in life and just kind of get some sleep back, some anxiety down and find purposeful work as opposed to being a 224K kind of breadwinner for me and my wife is my question. Well, I would love to separate this. I would love to separate the dollars that you're making from this. And I'd love to separate the assumption that whatever you do will earn you less money, right? And get to the clear point, which is you just don't like your job. And you want to be doing something else. We don't know what that is.

Starting point is 01:11:03 It could end up being something very lucrative for you. Is that fair? Yeah. I mean, I've been an engineering manager at a few companies, and it's always been stressful. I've been very work to live. And I'd be looking to maybe do something like a physical therapy assistant where I'm, you know, helping people find mobility or, you know, get parts of their life back. I have a little bit of my own personal history there. Okay. So you do have an interest that you have something that you're, you're targeting on. Yeah. Mm-hmm. How does that

Starting point is 01:11:34 affect you guys? I mean, what's, I got to believe that making 224,000 a year for quite some time, you've got a good financial footing? Yeah. So my wife and I have about 1.3 million invested between like 401ks and Roth, a little bit in Roth IRAs. We weren't very smart about that when we were young and then, you know, a lot in just a brokerage account. Okay. Probably about 800,000 there. What about your home is, you know, do you have a mortgage that paid off? We're about half paid off.

Starting point is 01:12:06 So we have 225,000 left on the mortgage on a, you know, $450,000 house. I think we got for 400,000-ish. What would that do for you guys? Let's pretend tomorrow you found a job in physical therapy. Suddenly you're making, I don't know, what does that pay $90,000? $65, $70,000, $80,000? What is it? Around $70,000.

Starting point is 01:12:27 So now you're making $70 instead of $2.24. Where does that put your mortgage in this situation as far as monthly payment? Yeah. So my wife has around like $80K in salary, and that pretty darn close. covers like our full living expenses. And she has the option to like work summer semesters, which she doesn't really do right now. So we would get, you know, to the point where we have like pretty negligible, like, cost of living.

Starting point is 01:13:00 You'd be at 150 between the two of you? Oh, no, no. Sorry. I was just giving my salary. My wife makes an additional, you know, 70K on. Yeah. So you guys have to make 150 household income. Is what it would go down to?

Starting point is 01:13:15 No, no, no. Our household income is around 300,000. No, no, no. If you were to take the job in physical therapy and make 70 and then she keeps making the 80, is that, okay, I just want to make sure we are following you on that. Because that's what we're talking about here, is we're going down from, you know, this household income making over 300 down to 150. What is the mortgage? Can you just tell us what it is every month? 1,800, I think. Oh, okay. All right. So you need to bring in 7,200 to make this make sense. and you guys currently would bring that in even if your income went down.

Starting point is 01:13:48 Yeah. So this sounds doable. And you got that taxable brokerage account to kind of fund any schooling or if there's a gap. You can kind of buy yourself some time because you guys have done this really well. But I would just make it a goal to still invest 15%, retire with dignity and not just go, well, I make 60 grand for the rest of my life. But I'm happy. I think you can get back up to making a six-figure income and doing what you love. Yeah, you're obviously a really smart guy.

Starting point is 01:14:13 And I do think, don't hear me say, what you do work, you have to do work that matters to you. You're doing this for the rest of your life. But gosh, maybe one day you'll own the coffee shop. 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.

Starting point is 01:14:56 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. 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 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.

Starting point is 01:15:34 For almost 30 years, I've recommended Xander for straight answers, competitive rates, and coverage that actually protects your family. Call 800, 356, 4282, or go to Xander.com for a quick and easy quote. That's zander.com. Well, guys, I want to tell you that your feedback really, really helps us. If you listen to the show and you take the time to leave a nice comment, if you take the time to share it with someone else, if you take the time to just, you know, when you're at work and you're chopping it up with your friends and you just mention the Ramsey Show, that does a lot for us. And not only does it do a lot for us, but it does a lot for other folks as well because the message that's on the other end of this is hope and life change. And there's so many people out there, George, who think that it's impossible to get ahead, who think that, you know, the American dream is dead, who think they can never pay off their debt. There's just a lot of hopeless folks walking around. And when they get a hold of this message, it really does have the potential to change their

Starting point is 01:16:47 life. I'm one of those people. I know you're one of those people. So don't think that it doesn't matter when you mention the show. It really, really does. So keep doing what you're doing. Plant that seed. You never know. Yes. Plant that seed. I love that. All righty then. Let's go talk to someone else who is experiencing the same hope that you'll be sharing. Abby, who's in Los Angeles, California. Hey, Abby, how can George and I help today? Hi, how are you? I'm wondering if I should get rid of my 2014 Honda and get a new car. I love this question.

Starting point is 01:17:23 What are we thinking? What are we going to get? Right. So I was thinking on getting a basic yacht, like the cheapest car to get that's like new.

Starting point is 01:17:35 I'm thinking of leasing, not like buying. You had me in the first half. Saying cheapest, you're saying cheapest car and then saying a lease, all of these things, they're like, don't go together.

Starting point is 01:17:48 The cheapest newest car that I rent forever. So what's behind this? I'll tell you my thinking behind leasing. I'm like God willing that I have like many kids. So after a while, I'm always going to like upgrade a car to like space wise. So that's my thinking of. So you're married? Yes, I'm married.

Starting point is 01:18:14 Okay. Okay, cool. and you have no kids now, but okay, the future, there will be kids, and you don't want to get a car and then have to switch it out with another car? Yeah, like I don't want to keep on buying and selling and buying and buying it. Why? Tell us why you want to do that, because cars, they go down in value. Like, you don't want to keep leasing something that you're overpaying for. You're just prepaying the depreciation, the worst part of it up front.

Starting point is 01:18:41 And that's if you don't have any extra damage or extra mileage that you pay fees for. And not to mention you're paying a payment for life, which means that's money you're never going to be able to invest. You're never going to be able to put it towards your goals. You're never going to be able to put that money, Abby, towards your kids' college. Right. So can we give you another path that might get you what you want that's not costing you? Yeah. We can all agree.

Starting point is 01:19:10 You deserve a car upgrade. You've worked hard. Yeah. The car is 12 years old. It's got a lot of miles on it, I'm sure. You're ready for something new. how much cash do you have on hand specifically for this car upgrade? So I'll tell you basically, I'm 19, so my husband's 21.

Starting point is 01:19:27 We got married last year. My husband has, we share like our money. So we have altogether savings, getting like $12,000 in savings. Okay. And then my husband's been investing in retirement and everything since he was 17, 18, So I don't know so much about that, but I know he's been investing. He goes to invest in stocks. Basically, he's investing in a lot.

Starting point is 01:19:55 So I have $9,000 in debt, but it's interest free, and it's not like something I need to pay ASCP. It's like from a family friend. Which it makes it even more. Okay. Let's reframe this because what I'm hearing, I actually really love this call Abby, and I'm glad that you call this because I think George and I are going to, you're going to look back on this call and you're going to say this was a turning point for me because what I hear is a brand new marriage, the potential for a brand new family. You guys are already thinking about family planning.

Starting point is 01:20:26 And you're exactly right, Abby, this is the time to start really good habits. Now is the time to start planning for the future for the life that you see for the values that you guys have. And so what George and I will suggest today is really going to help undergird that so you can do this with so much security and so much peace and not risk, all of those good things. So, what I would suggest for you, Abby, truly, is our basic baby steps, seven baby steps plan. And it's going to be perfect for you because you already have a major head start and the fact that you already have some money saved. You don't have a lot of debt. You're going to be able to walk into these seven steps and really just kind of cruise through them. And you're going to be shocked

Starting point is 01:21:06 at how quickly you're going to be able to accomplish the things that you want to accomplish. Okay. So that's me setting it up. So the first thing that we teach people is you really just need $1,000, just a quick cushion in your life. You guys have that. You have 12,000. Okay. So baby step one for us, you've already knocked out, $1,000 saved. But baby step two is we need to eliminate the consumer debt so that we don't have the risk in our life and so that we have all of our monthly income at our disposal to use towards our goals. So with that in mind, what I would do is of that $12,000 saved, I would pay off that $9,000 debt that you have today. Absolutely. Because even though it's zero interest. It is a family friend and every day that you keep that around, it's affecting

Starting point is 01:21:52 that relationship. Here we believe that the borrower is slave to the lender. It's biblical. I believe it. I've experienced it being in debt. It changes the relationship in a bad way. Your uncle shouldn't be, you know, or your aunt or your friend should not be your loan officer. And they see you take in a vacation. They find out you got 12K in savings and you still haven't paid them back. It's going to damage this relationship. And if you paid that off today, you still have 3,000 left over. left. You still got money and now we can save up an emergency fund of three to six months of expenses. And that's Baby Step 3. We're going to keep driving this car for another, let's say, six months you'll be there, right? Right. So you're at Baby Step 3. You got 3,000 saved. To Georgia's point, you save up a little bit more.

Starting point is 01:22:33 And now we can start to buy this car. But from there, and those are just the first three. You've cruised through. And now, like you said, your husband is already investing. So now he can start investing 15%. That's Baby Step 4. This is you guys. starting to build wealth for your family. Baby step five, you've got, maybe by then you've got, you know, your first pregnancy underway and you can actually start to put money aside for their kids college in a 529. And then you can start on a house, buying a house, paying down that mortgage. That's baby step six is putting extra on the mortgage. And this is the way, Abby, that we've seen millions of people start their lives. They go from kind of being frustrated. They go from being disorganized, to they go from not having a plan, to having a plan and feeling like

Starting point is 01:23:16 they have control of their money. They know exactly where they're going. They know exactly what comes next. And these are the people who build wealth quickly and efficiently and with no risk. Right. So also the reason I was thinking about getting me new cars. So I just part-time teaching. So with that, I'm carpooling.

Starting point is 01:23:34 And that over the month, I calculated that that would give me $400 a month, which I would be able to pay the month. But if you can do that, why not keep what you're driving and just bank that 400 a month? now you've got five grand after a year. Yeah. Because here's the problem, Abby. If you want to break out of this mentality, this is how broke people talk. How much down, how much a month?

Starting point is 01:23:56 That's all they care about is the payment or the interest rate. Right. The only zero you should be focused on is zero payments so that all of your hard-earned money and your family stays with you instead of just going back out to payments every month. Right. So the reason I was thinking about getting into cars because my car is like slowly maturely. It's like breaking down. Like my ACs not working and there's some engine issues and acceleration issues.

Starting point is 01:24:19 Okay. So put what I set aside, Abby, for a second. Put all that wonderful wealth building talk that I just did. Put that aside for a second. And let's just pretend, okay, all Abby wants is a brand new car. Can you at least guarantee me? Can we at least pay save up cash? Can we at least use the $12,000 to buy a cash car?

Starting point is 01:24:37 Can we at least do that? I don't know. I'm scared of like bringing down $12,000. Don't be scared. Guess what, Abby. The new car is going to be a used car. Right after you drive it off the lot. Right.

Starting point is 01:24:47 And that one's going to have issues eventually too. That's what happens with cars. And that's why it's even worse to have a payment on that car or rented expensively. And so I'm just telling you, I can tell that you're not listening to us. We're missing each other right now, but I'm begging you at 19 to not buy a brand new car. It is the number one wealth killer in America today. It's what keeps the middle class, middle class. And if you can avoid this at your amazing young age, you're going to be so wealthy.

Starting point is 01:25:12 And so smart. And be able to buy anything you want one day. Instead of looking back from now 10 years going, why, do I buy that stupid new car? Yeah, Abby, if you buy this car, I'm guaranteeing you. I am coming from the future, and I'm telling you, you're going to look back on this call and you're going to go, I can't believe I didn't listen to them.

Starting point is 01:25:30 They gave me fabulous advice. They're 20 years older than me, and I didn't listen. We're old people. You're old. Okay, I'll take that. Hey, what's up, guys? It's Jade. This back-to-school season, everybody's, looking for ways to save money. But here's the thing. The best ways to find margin in your budget

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Starting point is 01:26:48 slash Ramsey. $25 forever requires customers to remain active on Boost Mobile Unlimited Plan. Welcome back to the Ramsey Show here in the Fair One's Credit Union Studio, taking calls about your life and your money, still on it with George Camel. Let's go to Anna, who's in Boston, Massachusetts. Hey, Anna, how can George and I help today? Hi, thank you so much for taking my call. I was wondering, I'm in a situation where I've been married for three years. I have two little kids at home and I'm a stay-at-home mom,

Starting point is 01:27:25 and I thought by now my husband and I would have merged finances already. But every time I bring it up or say that it would really mean a lot to me that we could be a team, he just completely shut down and ices me out. And officially we're married, but we have no, nothing else that's joint. No, I'm not even on our house. I'm not on a bank account. I'm not on anything. And I just really don't know what to do. Why, if I were to ask you, why do you think that is?

Starting point is 01:27:57 Would you say, oh, he's just really controlling? or would you say he had a relationship in the past? What would you say is the reason in your estimation that he's icing you out? I think he doesn't control me in any other way. He's really a very sweet person. It's not like a bad, horrible marriage or anything like that. My gut tells me there's obviously something more must be going on. I feel like maybe he's hiding something because I'm the one who's actually quite

Starting point is 01:28:29 responsible with money, or I was when I had it. He isn't so much. He's more of the spender. He doesn't save. We don't have an emergency fund. I mean, nothing. We're not doing anything that we should be doing. And before we were married, and when I was working, I was attempting to do the baby steps. I was a long way off, but I was trying. And now since then, I haven't been able to do anything. So I just, I have to assume, like, maybe he has debt that he's hiding. I really don't know, but there's obviously it's a very deep issue to him. That's a fair, I think that's a fair assumption to make.

Starting point is 01:29:04 And I think that it's okay for you to feel that way because you know him the best. He's your husband and you're observing his, his behavior with the money and outside of the money. So that being said, I'm guessing that you have gone to him and said, I don't like the way this feels. It feels like you're hiding something. You know, it feels like we don't trust each other. Have you had that conversation from that point? of you? Yeah, I've never said like I feel like you're hiding something. I try to be, I try not to nag or attack or anything like that. I just tell him, I just really want to be a team member and

Starting point is 01:29:40 a partner in our marriage. But if you're honest and say to him, and I'll use some of Dr. John Deloney's language, if you say to him, the story I've been telling myself is that you're hiding something and there's something, there's this huge amount of debt that I don't know about and you're keeping something from me. I don't want to keep telling myself that story if it's not true. Like, can you help me? And the other story that I like to tell myself is that we're married and we're a team and teams do things together. That's the one I want to be true, but I'm not seeing evidence of it, right?

Starting point is 01:30:11 And so you're kind of like laying out both, you know, these juxtaposing sides of yourself that are at war and just let them know. And you kind of have the key to this because the ball's in your court. And unless you tell me that none of that's true and you open up the finances to, include your other team member, something's going to have to really change here. And you be the strong one that's got a clear point of view and has a clear set of boundaries on what must be true to move on. And let's see how he responds to that. Yeah, I mean, we have had fights about this and more civil conversations about this. And it seems like a pattern where, for example, I don't

Starting point is 01:30:55 have like a bank, we don't have a short shared bank account. So if I want to get groceries, I have to ask for the debit card and then I have to ask for how much money I can spend. That's crazy, Anna. And have you sat down with them really shared like, hey, I am scared, I'm frustrated, I didn't get married so that I could have a daddy I need to ask an allowance for. I'm raising our kids. This puts me at risk. I don't know anything about our finances. It's something where to happen to you. I have no clue where to start. And this is a non-negotiable of our marriage. That when we became one, it has to include our money too. I've actually said all of that.

Starting point is 01:31:29 And he shuts down? Yeah, he shuts down. Then you need a third party. You need a third party to enter the conversation. Yep. And go to, because this is a marriage problem at this point. The money is a symptom of something much deeper. And I don't know.

Starting point is 01:31:42 I can't say from here that he's, there's, you know, financial infidelity or what he's hiding or if it's just maniacal control. But whatever it is, it's very unhealthy. Yes. And your family, your kids deserve better than that. Because they're watching. They're watching mom and dad and see how they operate and they're watching mom scared begging for grocery money. That's not a picture of the marriage that you intended. No, not at all. And so if it's you going to a marriage counselor on your own, that's a good start.

Starting point is 01:32:12 But he's going to need to join at some point. Otherwise, it's him opting out of this relationship. And that's a very good point that George makes. I would definitely go to him and say, we need counseling. And if he won't go, you go on your own. And one of the things that I would want you to talk to with that counselor is what are some things that I can put in place that will let him know that this is a serious deal breaker for me if it doesn't change. And how do I kind of enforce those in a way that he knows that this is serious? And in the meantime, how do I keep myself safe? And right? And talk about those things and what that strategy is because it is important for you to be able to not just bluff, right?

Starting point is 01:32:53 when you have these conversations. There has to be something behind it. Otherwise, he's going to go, no, right? And you're just going to take it and keep doing it, right? So there's got to be a point that you decide at this is my point where I go, I can't go forward unless you pick up the slack here and do your side of things. Okay. Yes, I have tried to, for a long time, I've suggested going to a counselor, but he also refuses to do that.

Starting point is 01:33:21 I figured that was the case. Man, it takes two to make the thing go around and he's not doing it. Okay, yeah. And it's because he doesn't want to deal with whatever is being hidden right now, and it needs to come to the light. Yeah, that's what I wanted to ask, what you guys think. I mean, I can tell you. It sounds like something's being hidden.

Starting point is 01:33:41 100%. Listen, I don't know what, but when people are hiding things, it's because they have something to hide. I can tell you that. I don't know what it is. It could, I have no idea. But we've seen things on this show. anywhere from gambling to other types of addictions to just, to George's point, just purely

Starting point is 01:33:57 control. It could truly just be a control freak in a certain area. But it's the bigger thing that I want to caution you on is we just get calls like this a lot, Anna, and women in these situations tend to let this go on far too long. And the way it ends is not good. The longer they let it go on, the worse the ending. And so I really just want to empower you to stand on your two feet and really just have a backbone in the things that you're saying and really take action on the things that George and I are saying because I don't know about you, but I'd want to know sooner than later who this guy is and who he's, what he's going to choose when it comes to his family. Yes, it's terrifying. But yes, I know you're right about that.

Starting point is 01:34:47 Because a marriage is built on trust and respect. And right now you have neither of those things. Yes. On top of no accountability, no transparency. So I don't care how nice he is in other areas of your life. This marriage is going south. And we need to rectify that. And if he's unwilling to participate in that, that's very telling.

Starting point is 01:35:06 And so you need to get help for yourself because you are in a really bad position right now, being in the dark. And he basically sees you as a roommate taking care of his kids. Yeah. And I just also want to say it's a form of abuse, financial. abuse is a real thing. So I just want to use that language so you know how serious this is. And please, Anna, call us back if you need anything. We're definitely here to help and we're rooting for you. Hey, guys, Dave Ramsey here. Every day on this show, we help people work through real money

Starting point is 01:35:55 problems and figure out what to do next. Now, you can get that same kind of help any time with Ask Ramsey. Ask your money question and get answers built on Ramsey. principles we use on the show. Whether you're making a decision or just want something explained, Ask Ramsey is here to help. It's fast, simple, and free to use. Go to Ramsey Solutions.com and try Ask Ramsey Today. That's Ramsey Solutions.com. The truth is, guys, that buying or selling a home is a major decision, and with so much conflicting housing market news out there, it can be really hard to actually know what's going on. but we're here to help you understand what the market is doing so that you can buy and sell it with confidence.

Starting point is 01:36:52 We recommend a 15-year fixed-rate mortgage. You've heard us say that over and over. And the truth is those rates are currently hovering around 6% right now, but don't wait on a rate that you can't predict. Okay, nobody can predict this. And so we say, go ahead and date the rate and marry the house. Remember, you can always refinance later. And just remember, no matter what the market is doing, only buy when you're financially ready to do so. We want this to be a blessing for you guys, never a burden. Now also in other news here, median home prices did dip below 429,000 last month, which honestly, that's a 2.4 decrease from the previous year.

Starting point is 01:37:29 So that's good news, especially if you're ready to buy. One in five listings had a price cut last month. Again, good news. So you do have room, guys, to negotiate on the price repairs and closing costs here in Nashville. it's starting to turn into a buyer's market. So that's really nice. Remember, if you want trusted advice on the housing market, weekly mortgage rate updates, or free tools to buy or sell with confidence, go ahead and go to ramsysolutions.com

Starting point is 01:37:54 slash market, or you can just click that link in the show notes. Love it, love it, love it. All right, guys, let's go to Crystal, who's in Atlanta, Georgia. Hi, Crystal, you're on the line. Hi. Hi. Hey. Thanks for taking my call.

Starting point is 01:38:10 So I was a stay-at-home mom, but last year I became a single mom, too, my youngest, neither of my kids are in school yet. I found a part-time job. I also started a business, but it is not yet paying me, and I lost my job. So now I'm out of money, and I'm out of credit, and I don't, I mean, I don't even want debt, but I don't know what to do. Wow. Sounds like a lot of life has happened.

Starting point is 01:38:37 Yes. How long have you been a single mom? A year. Okay. Is there any kind of alimony or child support involved? I do get child support. There's no alimony. I get a small amount of child support each month. Okay. How much is that? It's $1,000. Okay. Currently, that's your only income?

Starting point is 01:39:02 Yes, for the last two months. What is your rent or mortgage? My rent. We have an apartment. It's about $1,300 a month. Oh, wow. So we're already going $300 in on the credit cards just for rent, and we haven't done anything else yet. Tell us about the part-time job and tell us about who's taking care of the kids. So I had a part-time job at like a school or preschool. Okay. and my kids could go there, but then I lost the job.

Starting point is 01:39:39 So I also at the same time, I started to do with that. Because I didn't have child care for my youngest. Okay. But my oldest could go there when he was three. So you physically couldn't go to the job due to child care issues? I could go to the job, and my youngest could go there with me, but then she just got too old. when she was with me at first, I was baby wearing her and she was super young, but then she was running around and it was just too much.

Starting point is 01:40:09 Understood. So the three-year-old and how old's the oldest? The oldest is. He's three. Three. How old's the youngest then? I'm sorry. She's one. One and three. Okay. Do you have any family near you? Are you kind of on an island or is their friends and family nearby? I do have a church community that has helped me. They've covered my rent before.

Starting point is 01:40:38 Okay. So I have some people. What we're looking for, the main key here is you got to be able to work. So child care is the number one unlock because people just giving you money, that's going to run out real fast and it's going to get old with people really, really fast. but if you can find a situation of child care, that could really be helpful. If you can maybe look into a group where there's a share where people are sharing the load and maybe you take weekends and watch the kids while the other moms go do something else, something like that if you can find it.

Starting point is 01:41:13 But the first thing, so I'd be looking for things like that. But the number one thing is let's start job hunting because the thing is if you can find a full-time job doing the things that you know how to do, you can generate enough income to be able to put them back into daycare and then have some leftover money to actually make your life run. So we got to, do you see what I'm saying? And this isn't forever because once they're, you know, four, five, six, they're going to be in school and that'll free you up even further and relieve that daycare cost. But in the meantime, let me separate what I said because I don't want it to be confusing to you.

Starting point is 01:41:51 You need to find that that big job that's going to give you, you know, we're looking for something that let's try to make $50,000 a year, $60,000 a year. But in the meantime, you're going to have to take something to fill in that gap. And that's where it could really be helpful to find some kind of co-op situation with these kids through your church. Maybe there's some other moms there. Maybe they offer a mom's day out. Whatever you can do. Maybe there's an older lady at church that you're like, hey, you're retiring. Do you need something to do? Can I pay you what I have just for this season, right? This is the time to really lean on relationships

Starting point is 01:42:27 as much as you can for time, for help with time, not money, if that makes sense. Yeah. Okay. How much debt do you currently have? A credit card debt around $20,000. Oh, how quickly was that built up? Since I've been, since I became a single once in about a year and a half.

Starting point is 01:42:53 Okay. So yeah, I don't want you to look up a year from now and be $40,000 in credit card debt at 27% APR and just wonder how you're ever going to climb out of it. So the goal is to stop the bleeding, quit going into debt, cover our four walls. That's what you should be focused on right now, is just food, utilities, housing, transportation. Do you have a reliable car? Yes. Okay. I would be asking the church community, asking all of my friends, hey, are there any open roles that you know of? Because full-term. time work making salary would really be a blessing right now. And have you applied for any assistance in the meantime? I have. Good. Okay. So, I mean, these are what George and I have laid out for you. I mean, this is kind of the basics of trying to get yourself on your feet, but you have to be persistent. So we're going to give you, find the work you're wired to do. It's going to have kind of help you get the wheels training on some of the work that, hey, these are rules that I could apply for. And It's going to help you know what could you be good at?

Starting point is 01:43:56 What are you passionate about? And so we'll gift you that for free. We'll also gift you every dollar so that you can make sure that the money that you do begin to make. You can start to budget it. And every dollar is going to speak to you with our plan in mind. It's going to teach you how to manage money the way we teach, which is no debt. So all of those things are really, really going to help you.

Starting point is 01:44:14 But I cannot stress it any more than this, Crystal. This is a season for you. It's not going to be like this forever. you've got littles right now and George made an excellent point. When they get school aged, it's going to be like the parting of the Red Sea and you're finally going to be able to have a little bit of help that you don't have to pay for in the form of them going to public school. And so if you can just hold on a little while longer and just keep pushing, this is probably

Starting point is 01:44:39 the hardest season. But it's not going to be like this. So don't give up. Try your best. I mean, make these calls tonight. That's your homework. I mean, tonight and this weekend, you're calling up friends. you're bringing them over to the house and you're saying here's where I'm at. And if you've

Starting point is 01:44:55 ever wanted to know how you can help me, this is how you can help me. I need childcare. I need us to figure this out together and get some friends around you who love you and who will really rally with you. Oh boy, oh boy. If you're out there and you're in a situation like Crystal, we feel for you. Yes. There are going to be seasons where you're like, how am I even going to put food on the table? So it's a good way to just think through this. I got to just cover the four walls. I don't have to do everything. Right now I should make sure that the rent is covered. I'm current on my bills. I can put some food on the table, basic clothing, put gas in the car, keep it running, and cover the utility so they don't shut off water and electric. Yeah, that's so good,

Starting point is 01:45:31 George. And I'll even put this out there. This is for me too. If you're involved in your church, our eyeballs need to be open and we need to be looking around for the folks in our community that look like Crystal, that we can reach out and help, that we can see what they're going through. because there's no reason that she shouldn't have folks helping her. So that's something that we can all do because we all have crystals in our community. There's probably a crystal that's going to be at church at Sunday. So let's get to them first so they don't have to ask us. Let's keep our eyes and our spirit open for folks like this that we can really help out and be generous with.

Starting point is 01:46:06 Our big investing essentials event is next Tuesday and Wednesday. Don't miss your chance to be there. Investing isn't difficult, but it's not something you can learn. in a 60-second TikTok video. So at this two-night virtual event, George Camel and I will walk you through my playbook for investing and wealth planning. We'll simplify everything from maximizing your 401k

Starting point is 01:46:55 to reducing taxes and setting up wills and real estate and much more. Join us next week on September 1st and 2nd. Tickets start at $199. Get yours now at ramsysolutions.com slash events or by clicking the link in the show notes. If you haven't heard, Ask Ramsey is our free AI tool, and it's built and trained on proven Ramsey principles, and today we'll break down one of the questions

Starting point is 01:47:32 that we received this week, which is a popular one. The question is this, George, do I need an emergency fund when I retire? The short answer is yes, and honestly, it matters even more in retirement, guys. So when you're working a job, when you're working a job loss or an income dip is temporary. In retirement, your income sources are fixed, right?

Starting point is 01:47:53 If your social security, withdrawals, or pension, also an unexpected expense can force you to pull from investments at the worst possible time. And you don't want to do that. Like if the market is downturned and suddenly, I don't know, you need to fix a major thing in your roof. You don't want to have to pull more out of investments. It's nice to have a nice chunk of cash sitting there that can help you there. So again, even in retirement, the goal is the same as baby step three. You need three to six months of liquid cash for, you know, those expenses. Again, in cash, not in the market. So if you're unsure about how much to keep in your emergency fund, go ahead and go to Ask Ramsey. They're there to help. You can do Ask Ramsey and ask your question today for your situation at Ramsey Solutions.com. All you have to do is just click that link in the description if you're listening on podcast or YouTube. All righty then. Katie's in Houston Tejas. What's up, Katie? Hi there. I have a question about protecting equity in my house in the event that my boyfriend were to move in with me.

Starting point is 01:49:02 Oh, boy. Nothing sounds romantic like in the event. And why would you have to protect your equity? Are you expecting him to contribute to your home in some way? So let me give you a little bit of background so it's not quite as bleak as it sounded by that short question. So we've been talking a lot about what our future might be like together. We've been talking about building a life together, getting a house together. And like in our heart of hearts, I think we would get married and I would sell this house and I would buy a house together. But interest rates are at 7% and I bought this house at a low interest rate. It has a lot of things that we really like and a lot of things that are good for both of us.

Starting point is 01:49:51 And he's expressed interest for his own goals in catching up on retirement savings. So both of us living here would pose a lot of advantages to us. But I'm, of course, concerned, I bought this house. I invested in it. And while I don't think this would happen with him, I would certainly want to protect myself because this was my investment and something I invested in. So I hope that makes a little more. It does. It's super simple if you go, hey, if you move in, which I don't recommend personally, but if he does it, he's a roommate.

Starting point is 01:50:21 So he's not building equity. Yeah. Because what happens when he breaks up? You're going to give him his share of half of his rent back? Yeah, it's your house. You don't have to share the ownership and equity of your house with a roommate. Right, but what if we did decide to get married, though? And then this was a practical decision. Well, then it's his house too. Well, then it's both your house. So if he gets married, if he decides to marry you, well, now the problem's solved. because the house is ours. All of the wealth is ours together. Even if that was something that I pre-existed. Yes.

Starting point is 01:50:53 I had a house before I married my wife. I didn't say, well, that house isn't yours. That's my money, my equity. I just go, cool, it's ours now. That's the simplest way to do it. Now, you can set up a pre-nup and all the complicated things saying, hey, all the equity that I built, I get to keep that if something were to happen, you can do whatever you want to do.

Starting point is 01:51:13 But the simplest way to go, about this is you guys get married, then he moves in, then the house is y'all's house. So you add him to the deed and keep paying the mortgage, knock that out, and the house is yours together. But it sounds like that's not in the picture currently. Well, it seems like you guys are getting, I think you're mixing your worlds in the pursuit of wealth, which is, hey, what if it was just Katie and what's, what's his name? We can make up a name. Greg. Let's say Katie and Greg. Let's say Katie and Greg. they're together because they enjoy each other. So their boyfriend and girlfriend.

Starting point is 01:51:48 Love that. And this is not the way I'd live my life, but it's like Katie and Greg want to move in together so they can spend more time to check. Okay, fine. But somewhere along the lines, it also became a way for Katie and Greg to get equity and make money and invest more.

Starting point is 01:52:04 And it got woven in with financial goals. But you don't get to do those things. And you shouldn't do those things until you're married. because then you have the legal protections, you have the commitment that undergirds that sort of trust. And so that's why George suggested what he did because it's just cleaner. It's not because I'm an old school traditional boomer.

Starting point is 01:52:25 It's to protect you. And because you have a better chance at a successful marriage and higher chance of building wealth if you guys do it in the right order. And can I be honest, the people who move in together, they call back six years later and they're still not married. And one of you is resentful and it's usually the one. woman. And I go, why aren't you guys married? Oh, you're living, okay, you've been living together

Starting point is 01:52:48 six years. And so he has really no reason because he's all the benefits of marriage without the commitment. And Katie, that's so, so true. I mean, I got to believe, yeah, that's so true. You will take away. And not to, not to say that you have to leverage these men into marrying you. I'm just saying there are certain, if everything's special, nothing's special. Right. So you're taking away what makes marriage such a special thing that's in a category of its own. Because it's like, well, number one, now we live in the same place. Number two, now we have, you know, probably intimate behaviors that we would have maybe only had a marriage, right? There's nothing there. And now he's getting the benefit of, I don't even have to buy my own house. And do you see what I'm saying?

Starting point is 01:53:35 You're going to make this tough for yourself. I think we've lost. We've lost, Kim. No, she's thinking. No, you haven't lost me. I think my concern is just I listen to your show a lot, and I see so many women who call in it 50 and 60. And they've been, and again, I don't think this would happen to me, but they have found themselves in a really bad situation because they've taken this step, and they haven't secured something for themselves. And that's what we want you to do. No, we're on your side. We're trying to show you that protections would be in place if you guys got married to where you're not going to lose. it all. It sounds like unless I understood you correct, unless I misunderstood you, you're thinking,

Starting point is 01:54:19 okay, Greg moves in and if he starts paying rent, you're thinking now he has equity in my house, but he doesn't. If he moves in as your boyfriend and he starts paying rent, he's just a renter. And I would have a cohabitation agreement in place. Yeah, if you guys break up, you own the house, you owe him nothing, truly, legally. Honestly, he's the one that would be in the, precarious situation. You would be in the position of strength. But if you guys get married and he moved in, your house, it would go from being I to a wee situation. Now, if that makes you nervous, that's another conversation. And that's something else that we can talk about. But truly, you are in the position of Katie, of power, Katie. We're just trying to make it to where

Starting point is 01:55:05 it's just clean. We just see too much messy on the show. And you said you listen a lot. So you've hurt all the messiness. And so we're trying to steer you away from that because I don't want you calling back in two years from now, frustrated, going, I didn't think this could happen. I didn't think it would happen. So I would tread with caution with the plan of we want to combine lives except for the part where we get married. Yeah.

Starting point is 01:55:29 How long have you guys been together? Just about three years. Okay. I'm telling you, Katie, George pointed out a big fact, which is, I mean, I would put money on the table if this were a betting game. If you let this cat move in, don't expect a ring any times. Like, you might get a ring, but the actual marriage date, you have just punted that down the field, and that is going to be another three to five years, if ever. And you'll be calling us back going, well, we've been together for 10 years. And he's, but we broke up and he's saying that I

Starting point is 01:56:03 owe him money because he helped redo the bathrooms and he helped remodel the kitchen. And all, I mean, these are the calls that we get. So you all. You are. or give him something, leave something on the table that he has to take that next step in order to get. You're worth that. And if you're worried because he's bad with money, that's a legitimate red flag that you need to address. I hope we gave you enough homework to do. I think we did. It's a lot to think about. She's having an existential crisis now. It is a lot to think about because sometimes I think people can think that what we're teaching is simply because of, you know, just a belief system. But it really is, it is a clean.

Starting point is 01:56:44 way to do life. It's a clean way to value yourself. It's a clean way to value your money. It's a clean way to protect yourself. There's more to it than just a personal value system. So hopefully you realize that, Katie. We love you. We're pulling for you. Dave Ramsey here for more than 30 years. I've been talking to folks on the air. And I can tell you that most people are broke. Not because they don't make enough money, but because they don't have a plan. You need to give every dollar you earn a job. because when you do that, something changes. You stop guessing. You stop worrying.

Starting point is 01:57:34 You stop stressing. Our every dollar budgeting app will show you how to find extra cash, pay off debt, and finally start winning with money. But most people won't do it. They'll keep living paycheck to paycheck. Keep hoping things will change without making a change. It's time to say enough is enough. It's time to take control of your money.

Starting point is 01:57:57 It's time to start your every dollar budget for, free today. Go download it in the app store or Google Play. All right, our scripture and quote of the day for the Ramsey show Psalm 8410, better as one day in your courts than a thousand elsewhere. I would rather be a doorkeeper in the house of my God than dwell in the tents of the wicked. I know that's right. I like that. Alexander Graham Bell said this, when one door closes another opens, but we often look so regretfully upon the closed door that we don't. Don't see the one that has opened up for us.

Starting point is 01:58:42 Man, that's a real talk right there, Graham. Alex. Alexander Bell, Graham. Alexander Graham. Yeah, you know me. Yeah. Oh, wow. All right, we went there.

Starting point is 01:58:54 Now we're going to go to Oklahoma City where Sarah is on the line. What's up, Sarah? How you doing? Hey, good. It's good to talk to you guys. Thank you. You too. How can we help?

Starting point is 01:59:06 I'll make it quick. My husband and I, I'm 44. he's 49. We've started kind of late on our wealth building journey. We were overseas after we got married for five years. So we've been hustling for about 13 years. I'm graduating from grad school next year, so I'll start working then. We have four kids. But we need to know how we are doing. So one of us, who I won't mention the name, but can relax and learn to have a little fun, but also how we can move forward since our income will change pretty significantly next year. Well, I think you're in good hands. I feel like, George, this is your bag right here.

Starting point is 01:59:44 That's right. I'm a recovering tight wad, so maybe I can help out. Yeah, I'm going to let you fly. Okay, so there's some competing goals here. You're trying to finish school, we're trying to get set up for retirement. We also want to live along the way. Is that what you're wondering? How do we balance this all? Yes. We don't want to retire broke. We also want to go on a vacation in the next decade. Exactly. Okay. I love it. How much debt do you guys currently have? How much debt? Yeah.

Starting point is 02:00:12 We only have our house and then my student debt. Our house, we owe about 90,000, and my student debt is about 30,000 right now. That'll go up a little bit next semester, but then that's it. Okay. What's the household income? It's about 80. Well, his growth last year was 112. His net was 84. It's around 7,000 a month when you average at home okay uh take home yeah 84 great what will yours be when you're done with grad school um i'm not sure yet i'm i'm getting a counseling degree a master's in counseling so it will depend on where i work and how much i work what's an average what's your goal i'm not going to make below 65 and it could be upwards of 80 um yeah probably around there i hope yeah okay so you said you're going to

Starting point is 02:01:06 have to go into a little more debt. Or is there a way to cash flow that instead of going further into debt? Potentially, but I think he doesn't want to pull it out of savings. There's the answer. What do you have in savings? Well, we have $35,000. Of liquid cash? Yes.

Starting point is 02:01:28 Okay. So $35,000, and what does it cost per semester for grad school? Next semester, it'll cost me about $6,000. so I think. So if you cash flow it, you're down to 29,000 savings. Yes. Which you still have 30 grand in debt. Is he doing any investing right now or either of you?

Starting point is 02:01:48 He has his 401k that gets invested. I don't believe he has any extra aside from that. Okay. So it sounds like you guys are just misaligned on the goals and what you guys want to do financially. What does he want to do? There's probably his accuracy there. Is he like I want to keep saving and put more? in retirement?

Starting point is 02:02:10 Basically, yes. I think his main frustration is like, we don't get to save enough. And I'm like, oh, we have four people. We're living very frugally. What do you, do you know what you have thus far? Like, do you have any money in retirement at all? He has $124,000 in his 401. Okay.

Starting point is 02:02:28 Okay. So I want to crunch some numbers on just what it looks like to continue to invest. Let's pretend for a moment that there's not the 30,000. of student loan debt just because I want to see what these numbers are. But I'm seeing a world where with the $35,000 of savings, you have a couple of choices. You can either turn around and pay these student loans off that are existing and drop that down. And then you could probably cash flow the $6,000 per semester on his income, $7,000 a month. I got to believe, believing that your mortgage is in the right place. And then from there, once you have that done, if you continue to invest,

Starting point is 02:03:08 just off of his income, I got to believe you're there at retirement with no problem. Do you see how I did that? So think about this future. You guys use your savings to cash flow school, then pay off your 30 grand in student loan debt, and then whatever's left becomes your emergency fund. Keep saving that up to you of three to six months of expenses. Now for the rest of your working careers, you can invest 15% of that $175 to $200,000 income. Right.

Starting point is 02:03:37 You're going to be okay in retirement at that point. and you're still going to be able to go on vacation. So we just need to do a few things in order. The next year is still going to be sacrifice. But then beyond that, you can really budget for all the things you want to do. Right. So you would pay off the student loan instead of, okay, because I think my thought was if I take my income from most of my first year,

Starting point is 02:04:01 we'll pay it off and then we still have the 35, just in case we needed it for something. No, the reason I wouldn't do that is because these, student loans, number one, they're going to draw interest at some point. And we don't even want to get there. And yeah, so they're unsubsidized. And then the other problem here is the longer you keep this around, it's like a pet. You just get comfortable with it. And the time is going to need to come for you to go, you know what? Enough of this. This is ridiculous. We need to change our life here. And so that's why I would go ahead and do that. So you pay it off. You have 5,000 left in savings. Now, you know, you could keep that there if you wanted to continue to build up that three to six months.

Starting point is 02:04:40 But I believe on his income, you guys can cash flow $6,000 a semester on $7,000 a month. You 100% can cash flow college. I believe that that's possible. And then from then on, once you get out of school, well, now you guys are making $182,000 a year. And now we can crank back into a full-fledged, I'm going to say a full-fledged 15% of investing. That's eating your vegetables right there. So now he ate the vegetables. We can have a little dessert.

Starting point is 02:05:07 We can set money aside for the vacation or the car upgrade, whatever it may be, in a budget. But it sounds like you guys have not made a budget together since being married, where you guys both are looking at this thing. And we agree. This is the game plan. We have. It just has been very variable over the years. And so sometimes it's like, okay, well, we need to survive. So let's do this right now.

Starting point is 02:05:29 And it's been like a gradual. It's based on how we feel that month, right? Not always. But sometimes it's what we need to do to pay the rent or to buy the house or just something on the car needs fix because both our cars are very old. And that's where that budget is you guys say, all right, what's coming up, right? We know we have that car repair. Let's set the money aside and the car maintenance repair fund. Let's make sure we're investing 15%.

Starting point is 02:05:57 Let's make sure we have $200 a month going to the vacation fund. If you guys can agree on all of that, then he's going to be good with the fun parts. if it's laid out clearly in the budget and it's not a surprise of you going, hey, I tell you don't go on vacation. We really need to go on vacation. All he's seeing is dollar bills fly away. So that budget is going to be your source of truth.

Starting point is 02:06:18 And I think it'll help you guys compromise and come up with a game plan that works to where you know you're going to build wealth for the future and you know you're going to enjoy your life now. But the next year, we got some homework. We got to clean up the debt, avoid going into more debt, get the emergency fund, which means he needs to pause investing.

Starting point is 02:06:33 I don't think I can convince him to do that on this call, but that would be the game plan to follow the baby steps that millions have followed. And if he does that, it'll still work out. I mean, if you plug it into the calculator, I love this thing. If you've plugged it into our investing calculator, you've got $124,000 there now. Once you're out of grad school and this, you know, the smoke clears on all of this and you have your full income to invest, if you're investing $2,275 a month, which is 15% of your gross income once you start working, you've got another 15 years for that to grow until age 65. Gosh, I mean, that's almost $1.7 million.

Starting point is 02:07:07 So. And you're 60 and he's 65? Yeah. That's not bad. That's not bad at all. And in that time, you went back to school. You got your degree. In that time you paid off all of your debt.

Starting point is 02:07:17 You've got three to six months of expenses. You're going on vacation. That's a great life. And that's if your income doesn't go up at all for 15 years straight. Exactly. Which we know is not going to be the case. Exactly. That's without the employer match, which I'm sure he gets.

Starting point is 02:07:30 Yeah. You know, the theme for the calls today, George, I feel like, is a lot of people wanting to do a lot of things at the exact same time. And it just doesn't work out like that. You have to prioritize and put things in the order that they are best suited to be done so you can actually accomplish things. One thing at a time. Focused intensity over time will do the trick. Now remember guys, 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 - Don’t Trade Peace for Payments

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