The Ramsey Show - Give Every Dollar a Name Before the Month Begins

Episode Date: May 17, 2024

💵 Sign-up for EveryDollar today - The simplest way to budget for your life! Rachel Cruze & Jade Warshaw answer your questions and discuss: "Is there a downside to recasting a mortgage?" "Should we tackle our debt right away with a layoff on the horizon?" "I work hard but I still feel like a guest in my own home..." "What should I do after maxing out my Roth IRA?" "Why should I choose mutual over index funds?" "Should I file for bankruptcy?" Support Our Sponsors: Zander Insurance BetterHelp Churchill Mortgage Health Trust Financial Next Steps 📞 Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET or click here! 📈 Dave Ramsey's personal playbook on investing and real estate. 👕The NEW Ramsey Merch is here! Shop Yetis, sweatshirts, hats and more! These 6 new arrivals are exclusively available only at the Ramsey Store. 💰 Enter the $3,000 Ramsey Cash Giveaway today! Enter daily to increase your chances of winning weekly $500 prizes or the $3,000 grand prize.  Listen to more from Ramsey Network 🎙️ The Ramsey Show   🧠 The Dr. John Delony Show 🍸 Smart Money Happy Hour 💡 The Rachel Cruze Show 💸 The Ramsey Show Highlights 💰 George Kamel 💼 The Ken Coleman Show 📈 EntreLeadership Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

Live from the headquarters of Ramsey Solutions, this is The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I am Rachel Cruz, hosting this show today with my good friend and bestselling author, Jade Warshaw. And we are here to answer your questions. It is a free call anywhere in the country at 888-825-5225. So give us a call. We'll talk about your money. We'll talk about your life, your relationships, anything and everything. We are here for you. So first up have at chelsea in des moines hey chelsea welcome to the ramsey show

hi thanks for taking my call absolutely how can we help um have you guys ever heard of recasting your mortgage and i was wondering if there's any downsides to it. What's making you want to recast? Did you get like an inheritance or like a lump sum? No, we're just very good at saving and we have maybe 20 to 30, well we are getting a tax refund, but we have $30,000 squirreled away and yeah we were just wondering if we could lower our monthly payment. Yeah so let's talk through this so for anybody listening really the idea of recasting is usually if you've got a giant lump sum of money in this case $30,000 you can put it towards the mortgage and then you can go in and basically have them redo the amortization schedule. So the interest rate doesn't change. And so there's no closing, you don't have to close to do it. But the point is, it can lower your payment.

And so my question to you, here, we're all about paying off debt. And the best way to pay off the debt is to pay more, not less, right? And so that would be my question is, and that would probably also be my rebuttal against this, is I want to see you paying more towards it. So can you give us more of a snapshot of what's going on financially? Do you guys have debt? So I'm finishing up nursing school. I have $12,000 of loans, which I can write a check for in the fall when I graduate. But I was waiting to see, like, if I get a sign-on bonus or where I'm going to work, what kind of loan repayment they have before writing that check off to pay off the debt. Is that it?

That's all. It's the $12,000. That's the only debt we have. And then you guys have um and and all your savings this is 30 000 how much will you get back for the tax refund 12 000 12 000 okay so you have 42 000 so yeah chelsea i mean if i were you guys um i mean i wouldn't wait i would go ahead and just pay off your student loan because you have the money for it, the $12,000. Go ahead and pay it off with the money that you guys have saved. And then any bonus or anything you get then is just gravy on top, which is awesome. And then what's left

for you guys will be that $30,000. And I would make sure that you have a good emergency fund in place. So do you know what your monthly expenses are? Yeah, they're about $2,500. Total. That includes rent or your mortgage and everything? Yeah. Okay. Is the purpose in recasting, I'm just asking, is the mortgage eating up too much of your monthly take home?

Are you feeling a squeeze? Is that why you're wanting to do this um i think technically it is slightly above 25 but once i start working we're gonna um almost double our income so um so to answer your question we don't really have to lower the monthly payment, but I'm just like excited to pay off our mortgage. Good. Listen, I love that. Let me just kind of outline the way we would teach it in order to get to that point, because Rachel and I both want you to get to the point of paying off your mortgage. And you're actually starting to get to the point where you can start working on that.

So Rachel already said, like, you'll have the 30,000 saved. We could call that three to six months of expenses because your refund is going to pay off the debt. Right. So you pay off the debt. You have three to six months of expenses. When you start working, then you're going to start saving 15 percent of your income. You and your husband combined. You'll figure out what that feels like. And then, you know, you can start putting aside a little bit if you guys plan on having children in the future. When that happens, you can start putting aside a little from that. And then you're actually cleared up to then start putting extra money onto your mortgage. And we would just say, apply it directly to the principal. So pay your normal payment. And then when you have extra money, just as you see fit, you can be very intentional. Yeah. And Chelsea,

for you guys right now, I mean, your monthly expenses at $2,500, which is pretty remarkable if that's it, is great considering that your mortgage is included in that. If that's true, then your six-month emergency fund, it may not be that big. It may be close to $12,000, $15,000. So you may have $15,000 to $18,000 extra of cash in that fund. And if you want to apply it, like Jade is saying, to the principal of your mortgage and go ahead and do that, I would be great with that. And you can even run some numbers and just say, hey, if I did a one-time swipe of $18,000 on the principal

and just, you know. Now, granted, your mortgage is, I mean, how big is it? How much money do you guys owe on it? $148,000. Okay, okay. So it makes a dent i mean it's it's not recasting it which is great but when you do like let's say you have 13 000 to put at it like right you don't keep all that 30 000 saved it is gonna cause on your monthly payment more of that payment each month

to go towards the principal when you do that and so that's that's really the magic of this whole thing so that's awesome yep thanks chelsea thanks for the call hope that that helps uh yeah jade i think that's one of these things especially in not this specifically with the recasting but the housing conversation you know trying to kind of find these like these ways to be able to do it because people want it in the market. It's just crazy expensive. But when things like recasting come out, it sounds good at first where it's like, okay, I can apply all this money. I'll have a lower payment. That's great. But to remember, the goal is not to have a lower payment. The goal is to get out of debt as quickly as possible.

That's right. That is right. Well, I love that conversation. And the truth is, you know, I even find that when you walk through the baby steps, you get to this point where it's like, I paid off all my debt and you're going, you've been so intense that a lot of people want to carry that intensity to paying off their mortgage as well. And listen, I always say if, if you and your spouse, if you're married, if you and your spouse decide that you want to keep that intensity, great. Yep. But you don't have to. You can kind of like pull back a little bit and say, listen, we've worked hard. We have sacrificed. Let's enjoy our life a little bit. And at that point, when you go to paying off your mortgage and baby step six, it's really about having that intentionality there. And so it's not a set

amount. It's not to say every month I have to pay an extra mortgage payment or, you know, it doesn't have to be hard in the paint like that, but you can decide what that rhythm looks like. Is it anytime you just get a windfall of money, you put it on there? Is it, you know, anytime, you know, you can look at your budget and figure out what's a normal rhythm of me being intentional, but that still allows me to have life, have a yes yeah because for so many people those steps you know one through three I mean it's intense you guys and and we were talking to a couple earlier even today and kind of encouraging them motivating them to be like to go all in and the deeper seeing that sacrifice the faster the faster you're going to start to see progress and it's worth sacrificing really deep for a short amount of time versus just dragging it out.

And then, you know, once you're done with that, though, especially those that, man, they sacrifice like really deep, have some breathing room, to your point. That's right. Yeah, that intentionality steps four through six. They're there. So even for Chelsea, even if they wanted to keep that and not put it towards the mortgage right now, wait till she has a job, wait till the fall a little bit, you know, that's okay too. But I would pay off those loans,

those student loans today since the money's there. They have a built-in emergency fund, which is great. And then anything extra they want to put to the house, put towards the principal. Thanks for the call again, Chelsea. This is The Ramsey Show. Are you working the baby steps? One of the smartest and most impactful changes you can make is to ditch your cash value life insurance plan if you have one and replace it with a term life policy listen the only thing a cash value policy is good for is overcharging you for the life insurance and then paying you a crappy rate of return on your overpayment. Stop wasting your money and really focus on getting out of debt and growing your savings. For over 25 years, I've trusted and used Zander Insurance to find the best rates on term life insurance from the top-rated companies.

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Yes. That say things that they love when it comes to money. Things like better than I deserve or debt free and people will make their own. Yeah. They come and they have their shirts or their sweatshirts and all of it. And so finally, somebody on our team had the grand idea of like hey we just need to do this so you guys we have some Ramsey merch which is really fun we sold this for the first time at the Total Money Makeover weekend live and so many people were wearing it and it was so great it's cute too it is cute this I saw a bunch of these girls wearing the sweatshirt and I remember I told the girl I honestly this

sounds terrible I didn't even know it was ours and I told him I was like I love your sweatshirts like thanks we just got them out in the store and I was like I was like I'm glad we're selling cute stuff y'all so like look at oversized sweatshirts ladies so it just says debt free good conversation it's embroidered it's not just like yes screened on like it's like very nice yes and then we have some t-shirts you guys this one says uh better than I deserve. We got a blue one. Yes. Beautiful.

A hat. Another. What's this one say? We have food at home. What a classic Ramsey. Ramsey way. A hat. Oh, and then the great.

We love a good mug. Love it. That's like the Stanley kind of. Yes. White Stanley looking mug. Live like no one else. All of it, you guys. So it's just some fun merch. So make sure to check it out. You can go to RamseySolutions.com slash store. And another great perk of it, which I think is always fun, is, you know, it's kind of a conversation starter when you have somebody that's wearing like a

cute debt-free sweatshirt. You know, naturally people are probably going to ask some questions. So then you get to share your story, talk through maybe the process, the journey you're on to be debt-free or whatever it may be. So it's some fun stuff. So again, go to ramseysolutions.com slash store and look at the fun, fun stuff that we have there for you. All right. Next on the line, we have Joe in Palm Springs.

Hey, Joe, welcome to the show. Hi, thank you. I appreciate you guys taking my call. Absolutely. How can I help? I'm calling because my wife and I, we've gotten to a point where we've only got two remaining debts. It's our car payment and then our house payment.

Nice. And we want to know if we should be throwing all of our money at the car and the house, knowing that a neighboring school district. I'm sorry. My wife is a teacher, by the way. And a neighboring school district just started issuing layoffs to teachers because they're running out of some of the covid leftover money. And we're a little bit nervous about how hard we should be going after the debt or if maybe we should be supplementing um you know our six-month emergency fund a little bit beyond what that six-month amount would have been um i mean do you think she could get a job within six months a teaching job um probably not for the pay that she has she she works in the more um you know probably the the higher paid district in our neck of the woods over here. Okay. And so, yeah, if she were to be losing a job like that, I mean, obviously that'd be a pretty heavy hit to, you know, our income that we have coming on in.

What is the income? She'd absolutely go and work. So our growth from last year is $146,000. I mean, right now we're taking home about probably $8,900 a month. She's also out, other caveat too, she's out on maternity leave right now, only bringing in 50% of her regular pay, at least until August when the new

school year starts. Okay. How much of the $146,000 was hers? Versus? It was, yeah, hers was $88,000 88 000 okay and then mine is another 60 so joe i mean what's i mean have they given her any indication that she would be one of these layoffs or is this just like oh my gosh they're laying off and we're scared and we're kind of freezing i just wonder how much of this is actually a reality for her um No, I mean, her district won't tell anybody anything,

but she's a relatively newer teacher. She doesn't have as long of a tenure as a lot of her other colleagues do. Okay. I mean, honestly, Joe, you guys have six months. If you had three months, I would say I'd probably bump it up. Absolutely.

I mean, I think you're six months. I think that, yeah, you guys are fine. If you want to run out a monthly budget on what a new income would look like if worst case scenario happened and she did have to get a job with a lower pay, what that pay would be. And you guys just kind of run some calculations

and see how you feel with that. But honestly, I mean, the six month emergency fund, that's the conservative side, obviously, of the spectrum. And so I would feel okay with that um if it were me and i understand that she's you know you guys have a new baby is this your first yeah it is okay and she is planning on going back to work correct she that's correct yeah and the truth is if if the worst were to happen and there was a layoff or if she was let go she could find a teaching job it may not be be at, you know, in the district you want

or at that same pay level, but she would find something until she finds the thing. So I do feel good about that. What do you owe on the car? The car, we just owe $22,000. We've prepaid it all the way through March of next year. So as it is right now, it's not accruing any interest. No interest will hit it until next year. So as it is right now, it's not accruing any interest. No interest

will hit it until next March. Why did you prepay it as opposed to making a lump sum towards the principal? We just weren't sure how our finances would shake out once our baby arrived. So we paid out. I mean, we killed off all of our debts and then tried to pay ahead on the car as much as possible, just so that wouldn't be something we have to worry about for about a year's time in case we just had money issues that popped up with. How much is in the emergency fund, Joe? We've got $22,000 in our emergency fund. And that's what you owe on the car? That's right, yeah.

If you want to know. Do you think that we should try paying ahead on the car that's right yeah if you want to know you think that we should try paying ahead on the car or should we just well it's just kicking the can down the road yeah continuing to stay in debt versus just paying it off and being done with it yeah if you really want to know what we would tell you i mean if we're just chatting face to face i would tell you i would say and this is what I would say to anybody, I'd say, you're going to be better off paying off that debt today because what's the payment? And I know you're ahead on the payment, but what is the payment? The payment is $700 a month.

Okay. So think about how quickly you could save up an emergency fund when you have an extra $700 a month, along with whatever extra margin. And that way you're done. It's free and clear. You're not worrying about interest. You're not playing a game. And then you guys are set up going forward that it's not really the question that you're asking today becomes a moot point. It's like, yeah, from this point on, we're saving up until we have a nest egg of three to six months that makes us feel safe and secure. And we're going into this maternity time and, you know, new baby time with ultimate peace because you don't have any payments. Right. Okay. Yeah. Yeah. Yeah. I hope that helps, Joe. I know it's probably not. I know. Yeah. Yeah. Not the maybe not the direction you

were calling. But again, it's this idea the direction you were calling. But again, it's this idea of... We wanted to run it by someone else. I appreciate having someone on the outside looking in because we kind of get tunnel vision on what our concerns are. Yeah, totally. And I think the reality, too, is what can happen so often. Yes, the layoffs are a reality. They are happening.

But at the rate of which they are and it actually coming to fruition, it hasn't happened yet. So there is a point of that reality of saying, okay, if something were to happen, then we act upon it. We don't necessarily have to act upon it when it hasn't occurred yet. That's right. Sometimes that's a different mindset. But yeah, I'm not being able, if you guys wanted to keep, I mean, I wonder when she would be able to know about the job.

But but still taking it down to that thousand dollars and then you guys saving what you can. Yes. To save up for it. And it's worth noting, honestly, for anybody listening. I'm always going to recommend you if you have extra money, I'm going to recommend you put it towards the principal, not make extra payments. Yeah. Right. Like the recasting we just talked about that's right degree right you're kind of like shuffling the deck a little bit versus just saying no go actually on the principal because that's going to help you better in the long term mathematically speaking and you almost always have to call in order to do that whether it's with your mortgage a student loan a car payment you almost always need to call them and say i already made my like I already satisfied my monthly payment, which goes, satisfies the interest for this month. Now this lump sum amount, which is

separate, I want it to go fully towards the principal and you have to call in order to do that. So yeah, we, we were talking to somebody, it may have been on the show or on social media or something. I remember saying, and they were making extra payments, but when they saw their principal really hadn't changed much and it was just catching up on all those interest payments. Yes. And it didn't do mathematically what they wanted it to do. So that's a really good point that when you are making extra lump sums towards your debt on the principal, that usually takes a phone call, some level of communication to be able to make sure that that's where that money is being directed.

Because that's where you're going to see the biggest bang for your buck in that. That's right. So it's a great question. Thanks, Joe, for the call. This is The Ramsey Show. This show is sponsored by BetterHelp. This is the season for Halloween. It's October.

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so it's convenient for you and your schedule. Just fill out a short online survey and you'll be matched with a licensed therapist. Plus, you can switch therapist at any time for no additional cost. Take off the costumes and take off the mask with BetterHelp. Visit betterhelp.com slash deloney to get 10% off your first month. That's betterhelp.com slash deloney. Welcome back. I am Rachel Cruz hosting with Jade Warshaw and here to answer your questions. So give us a call at 888-825-5225. And today's question of the day comes from Miranda in Florida. Yeah, she says a couple of years ago, my husband bought a house with his mom.

He told her that if she helped with the down payment, he would pay the mortgage, taxes, utilities, etc. I agreed because I thought it would be temporary as a way to help each other out, but it's sounding more like it's a permanent thing to secure her retirement. I didn't imagine living my adult life working so hard to pay bills and still feel like a guest in our home. I'm not against him taking care of his mom. I just want to live in my own space where I can relax. I love my husband so much and I don't want to get a divorce. I told him if things don't change in a couple years, we need to find our own place. He suggested that we rent a small apartment

where we can live by ourselves with our child. His mom can stay in the house while we continue to pay the mortgage as an investment property she's elderly so she cannot work is this the best solution oh man oh geez okay Miranda we hear you we hear you yes and I'm so sorry I'm so sorry but this is why you guys situations like this especially if you bought a house with the mom i'm assuming both names are on the deed like i mean like that's where stuff gets real real dicey so um hopefully that's not the case hopefully she just gave money towards the down payment yes so yeah so what i would do is like there's a realistic conversation to be had of i mean honestly if someone's going to live in a small apartment versus a house say it Rachel there's a family involved with children right and there and you

could find a great spot for her but it's just her living right it's just what she needs and now if she's elderly and doesn't have a lot of money you know depending on her situation and where you guys are I mean there may be a reality in a world where you would you help pay maybe the the rent in that way grandma got to go to the apartment yes but grandma's gonna go to the apartment yeah yeah because at the end of the day you know especially if you guys are not on the same page I mean we know I mean I think it's kind of more few and far between but people that live with their in-laws and it works you know like I mean that's that happens and both parties are genuinely happy great with the situation but the fact that you guys are on such uneven footing when it comes to the emotional

decision of like hey living with your with your mother-in-law then yeah then something something needs to change and again and it would I mean and there's a lot in that on whose name is on the house too, because there would have to be a whole process to get someone's name off or someone's changed and all of that. So in the cleanest way possible, if his name and you guys own the house, but she was the one that was just contributing right to the down payment, there will have to be some conversation of equity though, because of what the amount she put

in versus what you guys have paid um because she did put a down payment down so there is a level to be compensated from an equity standpoint in that for her for her retirement but um but yeah this ongoing process with no end in sight that's what needs to change and for you guys to have an end date would be the goal yeah absolutely i absolutely. I validate that 100%. I think it's totally fine as the wife to say, hey, I'd like our own, I'd like a place of our own and be able to experience life as our own family here. And I love your mother, but we can help her with an apartment. But there's also something to be said. She says that they've been working, paying off their debt. She says, we've been working our whole adult life. And it's like, you've got to be in a place where you can

help other people. And I don't know that they're in the place financially where they're able to help and not hurt themselves in the process. Just throwing that out there. Yeah, for sure. Yeah, that's the hard hard thing too is because when people get in a situation especially with you know parents and when they're going to retirement we've had a lot of calls of that of kids saying what's my responsibility for my parents but if you're not in a good place financially then you're you're not going to be able to help so getting you guys in a really steady place financially that if there was margin to be able to help and that's what you guys decided together, then that's a whole other thing. But I would see what is in her retirement and what she can float in a living situation. But that is sticky and it's hard because there could be promises that she feels like you guys made or that he made and you're breaking those.

So there's just going to have to be a really hard conversation, kind. And you may have to revisit that conversation once or twice because it's going to be pretty emotional. So I hope that helps, Miranda. All right. Up next, we have Darby in New Orleans. Hi, Darby. Welcome to the show. Hello, Rachel.

How are you doing? Doing great. How can we help? I have a two-part question. My son graduated high school recently, and he is planning to join the Marines in about a year. So I have a vehicle of my own, a 2017, with about 110,000 miles on it.

So I'm trying to figure out how should I pass, I want to pass the vehicle to him, but should I give it to him as a gift or should I sell the vehicle and give him the cash to buy his own vehicle? It's paid for? Yes, the vehicle is paid for. How much is it worth do you think um about seven

seven thousand okay i mean i either way um you know i think would work i think maybe having a conversation with him i mean yeah and it's a very kind of you yeah i mean if you're in a place where you can let go of this asset and you're fine and it's paid for and everything um yeah maybe just ask him hey do you do you want this car um and it may be actually a really great quality car um you know even though it's past a hundred thousand miles it still could be in a great condition versus him having to go and car shop and you know pay for an inspection and like all of that that you have to do when you buy another used car um or give him the option yeah if you want to go through the selling process I can help you with that and even help you find another car that's

worth the same amount of money it sounds like more hassle there's a part of me that would just take the car and and be thankful for it but I guess you know it wouldn't offend you if he said oh my gosh I hate this car and I would much rather have another $7,000 car that you guys could kind of tag team and do that together. Is that possible? Yes. Yeah. If I give it to him or sell it, I'm not selling it, but if I give it to him and I take cash for it, I plan to buy myself a vehicle with cash. Oh, you're having him pay you back?

No. Oh. you're having him pay you back no i would probably just give it as a gift or just sell it sell the vehicle to somebody and get cash for it and then maybe just see what he wants to do there's maybe a different type of vehicle than what i have right now yeah right so i would i I would, I would, yeah, I would ask him. I think that's a fair thing. Yeah, just to see what he wants because he may be great with just being given the car.

Or again, if he doesn't want that specific car, then he could say, yeah, dad, could you help, you know, could you sell it

and we'll get some cash and we can go car shopping together for that amount of cash. That could be, you know, I think it'd be okay for him to make that call since it'll be him driving it. That's true. Yeah. What will you do if he says, yeah, dad, I want the car.

And what will you drive and what's your plan for your next vehicle? I have cash saved already to buy a truck and I'm'm looking $25,000 to $30,000. Okay. Awesome. So great. How generous, though, Darby, and what a great position to be in. I'm like, to start off, you know, as he's graduating and going off to the Marines and everything for a year, to be able to have a car, that's a really generous gift of you to give your son.

So I have a second part question of the same thing okay yeah we have about 30 seconds okay uh should i put his name on my insurance put his name on your insurance car insurance and yeah yeah i would price it out car insurance these days is getting like really expensive crazy expensive so i would probably price out what the cheapest option would be if it would be to bundle on yours. Um, or if, yeah,

if it's cheaper to get an individual policy, you could go to Ramsey solutions.com slash checkup and it'll do all of those insurance checkups for you. And you can see the best option or check with Xander insurance. Really? Yeah, that's right. Yeah.

Go to Xander insurance.com and, um, see what they would do because yeah, car insurance, it Yeah, that's right. Yeah, go to zanderinsurance.com and see what they would do because, yeah, car insurance, it's a tricky, that's a tricky field right now, Jade. We're seeing prices. It's gotten crazy.

It's just gotten, and even home insurance, I mean, everything, it's just really gone up. So I would price out and see, and again, if he's a responsible driver and it's not going to hurt you long-term, yeah, I would be okay that for a year

because he's going to go off to the Marines. Why not? Yeah, I would be okay with that. Thanks, Darby, for the call. Buying your first home is a big deal and sets the stage for your financial success. So work with a mortgage advisor you trust, not just some random website. Churchill Mortgage is Ramsey trusted because they help you avoid hidden traps and expertly guide you through every step. Learn more at churchillmortgage.com. This is a paid advertisement. NMLS ID 1591. NMLSConsumeraccess.org. Equal housing lender. 1749 Mallory Lane, Suite 100. Brentwood, Tennessee 37027. Welcome back to The Ramsey show. I am Rachel Cruz hosting with Jade Warshaw. And

we've had so many new people join, join the show because of podcasts and YouTube and all of it. And so many of you callers are even new callers. You know, we've gotten a lot that say, oh my gosh, I've just been listening for the last three months. Some of you have been with us for three years, for 13 years. But regardless how long you've been listening to the show, one of the best ways to get the word out is to share it with your friends, with your family. And we see that. We see the bump when it comes to the algorithm. We see where we're writing in different lists.

And what's great about that, I don't know if you're like me, but if I'm like on a walk and I'm like, oh, I need a new podcast, I'll go to the top shows. Just search like the top and kind of look through. And sometimes that's how people find us, which is awesome because we want people to have peace when it comes to their life and their money. And if we're able to help guide that conversation and hopefully give some new perspective, maybe a new plan, a new pathway for people. That's really what we want. We really do have a heart here to help people find peace when it comes to their money

because it's such a stressful topic, Jade, and full of a lot of shame and confusion. There's so many messages out there. So if we can give common sense truth, that's what we want to do. And people find that and it helps change their lives. And one of the ways they do that is because of you guys sharing the show, reviewing it, subscribing, all of it.

So we thank you so much for those of you that have done that or that will do that. We really, really appreciate it. All right, up next, we have Graydon in Spokane, Washington. Hey, Graydon, welcome to the show. Hey, how y'all doing? Doing great. How can we help? My girlfriend and I are looking to get engaged probably near the end of the year this year

and get married in 2025. And we both own our own homes. And I know normally Dave says not to invest in real estate unless you're going to pay cash. But since we both own our own homes, we were thinking of selling my house and using the equity from that to buy a home because we'll have five kids put together that will need to fit under one roof. And then would it be dumb to keep her house

as a rental at that point and rent it out? Or should we sell both homes? I'm just curious since we already own both homes and have over $200,000 in equity on both. Yeah, for sure. Okay, so tell me about your home. How much is it worth if you were to sell it today? $450,000 to $500,000. Okay, and how much do you owe on worth if you were to sell it today uh 450 to 500 okay and how much do

you owe on it 200 okay and then how about her house hers is pretty much in the same range 450 to 500 and she owes 250 and she has 250 okay great so if you if you sold them both, you'd walk away with what? Probably $400, $450, something like that. Yeah. So you said you guys plan on having families. What would happen if you sold them both and put this money down on the house that you want to buy together? That's definitely an option. That's kind of what I was wanting to ask. I know the thing is right now, obviously the interest rates are significantly lower on the homes we own and

whatever we buy together, the interest rate is going to be triple plus what we're currently paying. I guess double, probably two and a half times what we're currently paying. So I didn't know if because of the lower interest rate, if it would just make sense to keep it as an investment property and rent it out, or if it would just make sense to keep it as um an investment property and rent it out or if it would just make more sense to sell both yeah i mean in in most cases it's going to be to sell both i mean unless you had the cash to significantly put down on one of the houses and the one that you want to buy i mean are you guys combined when this happens when you guys get married, what will your

situation look like financially? What kind of debt do you guys have? Consumer debt? What kind of savings comes into play? I just recently started the program and I wasn't very far buried in the first place. I only had like $3,000 in credit card debt and not only taking me a month to pay off. And then I know she has $40,000 in student loans, but I figured use the equity from my house to be able to pay that off quickly. And then our combined household income would be in the $180,000 to $200,000 range. My income varies based off overtime. That's great. So we easily afford both houses. And that's kind of why I was like, maybe it makes sense. I'm not

quite sure. Whose house is bigger? Like what's the better property of the two? Yours or hers? So mine, we could in theory fit the whole family in. It's a five bedroom, three bath. So in theory we could fit, but it has no backyard. The backyard's trash. And the house isn't nearly as nice and stuff on the inside. It's older than her home, but her only has four bedrooms and we'll have five kids right away. And then we would like to ideally add another kid eventually. Why will you have five kids right away? She has two or she has three kids. Got it. Got it. Okay. So you're combining families. There's part of me, here's another option. And I mean, there's not, this is not a right or wrong, but what would it look like to sell one of the properties? Cause they're about worth the same

and there's the same amount of equity. It seems like just about what would it look like to sell one of the properties because they're about worth the same and there's the same amount of equity, it seems like just about what would it look And then you're kind of like in this place where we don't have to do anything, where we don't have any debt or it's very low. Our mortgage is very low. And if you decide, okay, the five bedroom house isn't working for us, we want at some point, we're going to want a bigger yard. That's great. But you're just financially better off and you don't have the rental hanging over your heads. And you've freed up a bunch of income. Yeah. I almost would just say, great, and to sell hers. And then you guys take out what's left.

And that's what Jade is saying. But throw it at this mortgage and at the student loan. You can basically have everything paid off. Yeah. And then wait a year or two. I mean, there's no rush. And just see even at that point, you know, what what the housing market's doing, what rates are doing all of it. I would almost just want to be in a paid for house at this point and try to juggle two mortgages because the truth

is to yeah, in a dream world, having hers as an investment property, I get it. But what happens when someone doesn't pay rent? What happens when things break in it? I mean, like you still owe money on it. So in that case, it's not this cash free investment. It's something that you guys are going to have to deal with. And a part of me would just say, golly, I would just simplify it all. Enjoy your married life, newly married for a year or two. And then if you guys want to upgrade houses, you can. Because are all five kids, will they be full custody with both of you like will you guys have all five like pretty consistently would you say or what what will that look like she has her kids 50 50 pretty much exact and then i have my kids every thursday and every other weekend okay

okay so even from a space standpoint you know you guys would be fine in the five bedroom um and i know you said it's older and all of that but man there's great and i'm telling you there's something about freedom freedom yeah not having not having any any payments at that i mean like you guys have done really well so far so just keep that i would just keep that going and i probably i wouldn't i wouldn't fool with keeping an extra property i think about about whichever one, if you're really concerned with interest rates or really concerned with wanting to stick with one of them long-term for some reason, I'd choose the one that you maybe can make

into what you want it to be, right? Like you said, one of them, the yard is trash, but maybe the other one is good and there's like space if you ever wanted to, you know, make some improvements with it because the truth is you're gonna have a lot of extra money that you can throw at fun things like that uh if you do it the way that rachel and i just suggested so i'd also put that into the equation and think okay maybe the yard is trash but maybe if we put some money into it it

could be awesome so there's there's some creative thinking i think that can be done here um not just financially but to create to make these one of, make one of these properties what you ultimately want it to be. Yeah. Okay. And then I'm going to give you another path. Great. And sorry, I know we're going all the way around. Let's go. If you sold both, like the price point of houses right now, what would a house be in like your dream world? Like what's like, oh yeah, we could get it for X amount. I mean, it's kind of crazy. We've been kind of looking on Zillow a little bit and this is allegedly

according to the, and we're one of those most hottest areas in the country right now. And if you put a five bedroom filter, you can put it from 300,000 to 800,000. And the cheapest house is like 600. Right. Okay. And the cheapest house is probably crappier. is the cheapest house crappier than your house

no i would say it's nicer like you have a better kitchen granite countertops and all that stuff okay because it's a little bit higher but okay because if you did sell both you'd walk i mean you'd have like around 550 000 but you'll still have closing you'll have a lot of fees in that which may take down right yep which would take it down have closing, you'll have a lot of fees in that, which may take down, yeah, which would take it down. And then you'd have a small mortgage on a small amount on maybe $200,000. But I don't know if that's worth it right now. Great. And a part of me would just, man, it's the rates for me. Yeah, I would sell hers, take that equity, pay off her student loans, pay off most of your mortgage. And man, that's a, yeah. And you can always upgrade countertops and all of that later if you want, or wait a year or two. And if prices, you know,

stay the same or continue to tick up a little bit, save some money, sell yours and, you know, put that money with it and get a, get a house that you guys want. So I hope that helps. Thanks, Jade, for being a great co-host. Thanks to everyone in the booth. Thank you, America. This is The Ramsey Show. Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships.

I am Rachel Cruz, hosting this hour with my good friend, Ramsey personality and bestselling Author, Jade Warshaw. And we are here to answer your calls. So give us a call at 888-825-5225. We will be answering your questions about life, money, career, relationships, anything and everything. We are here to talk about it. So up first, we have Jason in Irvine, California. Hey, Jason, welcome to the show. Hey, how are you guys doing? We're doing great. How can we help? Yeah, so I'm a graduate student. And I'm really wondering how I should be spending my extra money.

So what I take home is usually about $33,000 a year. And I already have a six-month emergency fund. I have no debt. And I've matched out my Roth IRA for this year already. And I'm just wondering, the extra money that I have, where should that be going? What should I do with it? Wow, good for you, Jason. Very good. How are you paying for school?

So it's fully funded it's a phd program and uh stem so wow they pay me to do it good for you that's amazing yeah so you're making money through the school and getting it paid for that's incredible great um when do you graduate Oh, probably 2026, maybe 2027. Okay. So two to three years. How old are you? I'm 25. Okay. And how much extra money are we talking a month? So you've maxed out your Roth, which is amazing. Yeah. How much money per month do you have that you're wondering what to do with? So typically in a typical month, I'll save between a thousand and a fifteen hundred out of my stipend. OK. And then I put away a big chunk of that to go into my Roth for the next year.

So I guess what I'm looking at is like six thousand at the end of the year. I don't you know, I don't know if I should just throw it in a high yield savings or if I should be investing it or what do you think? Yeah. If I were you, I would just put that in a high yield savings account and I would just let it sit there because, I mean, we're talking, you know, 12 to maybe 20 on the high end after three years of cash. And I would assume, Jason, after school, you'll probably be looking for a job, possibly be moving. And that could be a great down payment for a house. Yeah. What's your living situation now? Yeah. So I have, I have student housing, which is subsidized, which is great because Irvine's very expensive. Ideally, like I think the next big purchase that I want to make in life would be a house, ideally here in Irvine, which would be quite

expensive. So you think just, you know, renting for a few years after I graduate, saving up as much as I can. And then, you know, the extra that I have now, just putting it into a high yield savings would be good. Yeah, that's what I would do. And for a first time home buyer, you'll look at putting anywhere from five to 20% down. I mean, more if you have it, but you probably won't considering California real estate. I was going to ask about that. Irvine is expensive. Do you plan on staying there? Is there a reason because your family's there?

Yeah, so I have lots of family nearby. My girlfriend's family is nearby. I just love it here. I'm happy here. Okay, there you go. That's enough for me. Yeah, so I think it'll be, yeah, you'll have to,

yeah, have some good savings to be able to do that. And remember, when you do purchase your first home, you know, it doesn't have to be a single family.

It could be a condo. It could be a townhome. I think just getting into the market is great. And honestly, Jason, you're in a really great position. I'm like, you have, you're maxing out,

you know, one avenue of retirement, which is great. But I would hate for you to like have all retirement funded and then no cash and then you're not able out, you know, one avenue of retirement, which is great. But I would hate for you to like have all retirement funded and then no cash and then you're not able to buy a house. So I would put that extra. And some high yield savings right now, I mean, they're getting four to five percent. So it's really great. I mean, like you can really take advantage of that, which is awesome. So that's exactly what I would do. That's where my six month is right now.

Oh, perfect. Just keep adding to that awesome so great Jason well well done we applaud you but yep just put in a high yield savings you probably have to rent maybe a year or two or three after school even um but I think a down payment on a house is your next big step so great job um next we have Alexis in is that Lawrenceburg, Tennessee. Hey, Alexis. Welcome to the show. Hello, ladies. My name is Alexis, obviously. I'm a baby step number two with 18,000 still to go. I'm a single mom.

I was calling because I'm not sure if I should pause the baby steps to save up to move back to Ohio where I'm from. My dad has end-stage cancer and when he passes I will resume part of the training over my grandmother who's in a memory care unit. She has dementia. I'm sorry. I'm not I'm not really sure if I should do that or not. Oh gosh Alexis I'm so sorry. Thank you. Okay so you're looking at you'll be wanting You want to move to Ohio Because your dad is sick And have they given him I mean, I know a diagnosis Do you know

Have the doctor said anything With just like lifespan and stuff? Do you know? Is it aggressive? Well, they Yeah Well, it's slow But they gave him six years

And that was eight years ago. So he's been on borrowed time for the past couple of years. Wow. Okay. Okay. So, yeah, have you looked into moving costs, what it'll take to move? Have you looked at places to rent possibly up there? Have you looked into any of that? Yeah, I have. I have the option of staying with my dad and just kind of doing half of the bills there or finding my own place, which would kind of be equivalent to what I'm paying now in Tennessee.

Okay. So it's kind of the same. And I have a remote job that allows me to work from anywhere. Oh, good. That's great. So I can take my job with me. Okay. And you said you're a single mom. How many kids do you have? Only my son. Okay.

How old is he? He's homeschooled. He's 14. He's 14 and homeschooled. Okay. Yeah. Well, I think, yeah, I think this is one that I would say, yeah, pause your debt snowball and save up some money for sure to be able to cash flow this move.

I think this is an important move. This is one of the times I would probably say pause to be able to be close to your dad during this time, especially since this is, yeah, what's looking like in your future, even taking care of your grandmother. So I think it would just be up to you, Alexis, to run the numbers on what's best from you from a financial standpoint of staying with him or getting your own place. And just think of the emotional toll, too, right? You'll have your son. And for him, you know, is that a gift being there with him and his grandfather? Or is it we probably need some space, you know, from some of it because he's, you know, will have his own thing.

Like what, you know, as a mom, I think you can make that call from an emotional standpoint, but also don't forget about that financial standpoint too, because I want you to be wise, wise with that. Will you have a support system when you're there in Ohio? Because you're taking on a lot. I mean, my little brother is there and so I'll have him and I have my church family. Okay, great.

Like my home church from when I was in Ohio. Okay, that's good. I'll have that, but as far as the rest of my family, they'll bring me here in Tennessee. Okay. Yeah, that's a lot, you know, to go and you've got the situation with your mom, the situation with your dad, plus a move, plus a teenager.

There's just a lot in that equation. I just want to make sure you've got people around you that you can lean on and cry on their shoulder and let them hold you up and take care of you because you're going to need a little bit of yeah care yourself so sure for sure yeah so again this is one of the times we talk about for momentarily pausing the baby steps but a move like this would be one of those. So to pause and save up and make sure you cash flow all of that. But Alexis, I'm so sorry. That's a hard, this is a hard season. I know, but you're doing a great job.

And hopefully we helped give you a little bit of peace and guidance. This is The Ramsey Show. You've worked, saved, sacrificed, and been gazelle intense with your financial game plan. But do you have the right defense in place, like the right health insurance? Look, you can't walk past a doctor's office these days without getting a massive bill. And if you don't have health insurance, a major medical situation can undo all of your hard work. That's where my friends at Health Trust Financial can help. They work for you, not the insurance company. So they find you the right health insurance and

they save you money. Ramsey has recommended Health Trust Financial for two decades because they're the experts. And whether you're 19 years old or 90, you can trust them to do two very important things. Listen to you, then find you health insurance coverage with everything you need and nothing you don't. Health Trust Financial is your one-stop shop for unbiased advice about affordable health insurance options. They could save you hundreds of dollars a month, so make sure you're not overpaying. Go to healthtrustfinancial.com today. Healthtrustfinancial.com. Welcome back to The Ramsey Show. I am Rachel Cruz, hosting with Jade at Warshaw and taking

your questions. Up next, we have Kaylee in San Diego. Hey, Kaylee, welcome to the show. Hi, thanks for having me. Absolutely. How can we help? I just have a question. We're in kind of a unique situation. We're a military family out in San Diego. We bought a house a couple years ago, and we don't totally love the area.

It's kind of a situation where I don't feel safe when he deploys in the area um we're in a position where we think we can make probably about 40 000 off of the house if we sell it right now just because of the market in san diego and we only have about 35k in debt so right now we're considering selling the house and then taking the money we make off of the house and just moving on base, paying off all of our debt and being debt-free. But I've just been wondering if that sounds like a good idea. I don't know. I feel like it's out of order on the steps almost. Yeah, well, we wouldn't normally tell somebody sell their house to pay

off debt we'd normally just say yeah like you know work extra you know cut your expenses and just do it that way but if you're not happy with the home that you're in for some reason then i think that's a separate conversation right so um i would look at the house as one conversation the debt as another and then and then if the finances overlap then that's a pro um but i would kind of keep them i would keep them separate because would you even if you didn't have debt would you still sell yeah i'd say so probably okay the situation we're in i mean we're gonna have to move anyways in the next two years yep yeah because he's military and they're gonna make us move in two years and we've got a great house on base that we're interested in um okay of course that puts us back into like the

rental people of course which that part i don't love but yeah i think we would sell the house anyways yeah well i would say you know because of career choice and being in the military rental people is where i would put you guys anyways because what you're experiencing now yeah you move so often and until you're in a place long term or you know his his time is up there um I would be I would tell you to rent anyways so yeah this feels like the right move Kaylee I think so my only question would be um I'm always looking at the behavior part of it so what kind of debt was the $35,000? $35,000. So only some of it is a student loan, about $8,000. That's all I have left on that. And we were actively paying that off, but now I'm actually going back to school. So we did pause on that just so I can bankroll school and pay for it

right now. Okay, great. Yeah. And then the other is a car payment, of course. A car payment. Okay. That's the other one. So it sounds like you've kind of learned your lesson. You're like, if I go to school this time, I'm cash flowing it, paying off the car from now on we buy cars in cash. I just like to check because I do think that sometimes when there is a convenient option to pay off debt, I'm happy that you have that. But I also want to make sure that the behavior is in check too, so that you don't go back in debt again. Yeah, absolutely. Definitely. Yes. And I mean, the student loan the first time too is like lost the scholarship situation too. So we're definitely like on the same page. We want to be debt free. This definitely seems like kind of an easy way out, I guess, but we're just not really happy where we are. Yeah, listen, I'm glad it's there

for you. That's great. It might be a good idea. Yeah for sure yeah. Awesome well great I'm glad to know that we're on the right track then thanks guys. Absolutely thanks Kaylee. Yeah again I would I would separate those right because I think like you said it's easy to do something like sell a home and just have a sweeping pass over the debt and you keep on moving but those conversations are important and again being in the housing market right now, if you're in, and especially, you know, if there's a good rate and all of that, that's such to your advantage,

but he's in the military, you guys, and it's like, you're moving constantly. And always when it comes to, if you're in a job that you're not going to be somewhere for at least five years, renting is usually the smartest option because by the time, you know, up and down of down of the market you know depending on what's going on you're less likely to to lose money in some capacity and so renting is usually just it's

the easiest and honestly the safest way when you're in somewhere for less than five years consistently like a military family okay so j Jade, there was a really interesting article here on hill.com that says almost half of recent homebuyers stretch to make on-time mortgage payments. Yeah. So it's about 50% of homeowners right now. Yeah, there are some really cool stats that were in that article that I think really just point to the madness of the time. Like it's just, we went from a time where people were paying $50,000 over asking and $100,000 over asking. And then to a point where like interest rates have gone through the roof and it's like, am I ever going to be able to buy? There's just been so many shifts in the market and people just trying to do the best they can. And so a couple of

the stats that I thought were interesting, 43% of recent home buyers say that they're struggling to make on-time mortgage payments. And that might be because they overbought or kind of overextended themselves. This one says roughly 47% said that they feel in over their heads financially, which we talk a lot about that. We want people to feel like their mortgage is a blessing and not a burden. Still 44% say that they have taken on additional non-mortgage debt since purchasing their home. So I feel like Rachel, that points to my mortgage is probably more than 25% of my take-home pay. And in order to make life feel comfortable

and feel like what we're used to, we're using credit cards or we're using debt for things that maybe we would have used cash for. Here's another one. It says 82%. This is the one that gets me. 82% said that they had regrets about their purchase or that it didn't improve their happiness. And that, Rachel, I feel like that's right in your zone. Oh my gosh.

It is. And like the housing idea, again, financially speaking, it's wise to own a home, right? Eventually it is because eventually you're going to pay it off. It's an asset to you. You're not having to worry about rents rising or whatever. Like having a house in your financial portfolio is something that we want for you.

But at the same time, people believe and really do oh my gosh if i could just have a house if i was just a homeowner life would be better life would be okay and it's one again it's another just thing you guys again a very smart financial move if you're in the position for it but it doesn't contribute to your happiness and your contentment and if anything what this article is showing is half of americans are stretched when it comes to this and so it has become this thing of like oh my gosh we felt like we had to get in and we got in and especially if you bought gosh in 2000 you know 21 22 and everything like this at least it's kind of corrected itself to a degree it's still it's still higher but it's not like it's going you know bids aren't crazy over asking

price like they were back yeah you know two years ago and but i think people fell into kind of the hysteria of it to a degree of like oh my gosh i gotta get a house i gotta get a house i gotta get a house 100 and i feel like where we're sitting we're playing both sides of the fence on okay we're we're on one hand telling people listen if you have to rent for a little bit longer, it's OK. There's no stigma in renting so that you can get into a place and have peace about it. And if you do have the money, we know that interest rates are super high. And I think you and I were talking, doing a real estate thing. I mean, 6%, 7%, even 8% for an interest rate.

We've seen that before. But because houses are just so expensive attached to it, that's really, so it's like, yeah, we've seen these interest rates before, but not at this price point. And so people are feeling that and there's people who have the money and they're afraid to pull the trigger because they're like, do I get in with these when these interest rates are so high? And so both sides of that can be true. We want, if you can't afford, we want you to go do it. If you're not ready, we want you to rent for a while. And so both sides of that can be true. We want, if you can't afford, we want you to go do it. If you're not ready, we want you to rent for a while.

And so that's how this is. And so I think, Rachel, let's give them some input on if you're feeling tight in the mortgage that you're in, what are some things that they can do? And if you're ready to buy, how do you know that you're ready to buy? So let's kind of tee that up. So I would say if you're ready to buy, of course, here we teach that we don't want the payment to be any more than 25% of your take home pay. I think a lot of you know that. I know for me, I kind of came up with an acronym to be prepared for this because the first time Sam and I purchased a house, it's new and there's like costs that you

don't know about. And it's like, okay, we have our three to six months of expenses. We have our down payment, but then sometimes other things pop up and you're like, oh, I didn't know that. And so, you know, the down payment, we always say if you're a first time buyer, five to 20%, and if you can do more, do more. Be prepared for earnest cost, earnest money, especially if you're selling a house to get into another house.

Earnest money is money you put up up front. So if you haven't cleared on the other house, you need that money. Then things like closing costs, inspections, appraisals, all of these things are coming out of your pocket and you want to be prepared for that. And so that's how you know. Yeah. And I think there's a reality to you guys. If you just have too much house, I mean, if it's 50% of your income, it's going to be hard to do much of anything, whether investing or paying down debt. So again, looking at the whole picture, I think is really important.

But be in a position, if you are ready to buy, that you feel good. You feel good about it. This is The Ramsey Show. Well, back in 2020, actually March of 2020, April of 2020. The worst. We were about to embark on a Ramsey Live Like No One Else cruise. And right around that time, when we were supposed to get onto a cruise ship, 2020 happened and the pandemic started to creep up.

And I remember thinking, who's going to tell Dave that we are not getting on this cruise ship? Like, there is no way that we're... But man, up until the last minute, and finally everything canceled. The ports were closed. Everything shut down. So the cruise was officially canceled. And we have heard about it since then from people pretty continuously.

And especially those that visit Ramsey Solutions are like, oh, we are signed up for the cruise. Are you going to bring it back? Are you going to bring it back? Well, the answer is yes, we are. like no one else cruise is back so you can join myself jade warshaw dave ramsey dr john deloney ken coleman george camel and some other special guests like stephen curtis chapman uh deanna carter some famous chefs like we have we have a We have a boatload, you could say, of some fun, entertaining

people that are going to be on this cruise ship. So we're taking over the entire cruise ship and it's stopping at Turks and Caicos, St. Thomas, San Juan, the Bahamas. It's going to be a fun week. Seven whole days. Seven whole days.

We will be on this ship. It's a beautiful ship, actually. Really, really beautiful. And here's the thing. VIP upgrades. They're already sold out. Most of the suites are almost sold out, but there are a few cabins remaining. So if you want to make sure to check it out, if you want one like with an ocean view and

all of that, you need to put your deposits down soon because it's actually outselling the one in 2020 it's selling faster wow than that one did so this one um what do you call it jade take sale yeah set sale yeah march 22nd through the 29th okay so here in about nine months and again these are for people that are on baby steps four five six or seven so if you're getting out of debt, pause. We may do another one. If you're building up that emergency, pause. Don't don't come on the ship.

Continue down your financial plan. Or I should say, don't pause your plan. Keep going. But for those of you that have lived like no one else, we are here to celebrate you. So go to RamseySolutions.com slash cruise. To check it out. And sign up and come hang out. For a week with us as we celebrate. Celebrate you guys.

Alright up next we have Nicole. In St. Louis. Hi Nicole. Welcome to the show. Thank you. So I have. A unique situation. I'm getting an insurance payout of approximately somewhere around $40,000 in about a month.

And then I will have the opportunity to get a payout of around estimated around $60,000 next year from a victim's fund. What happened, Nicole? My son was killed in an accident last March. Oh, I'm so sorry. Oh, how old was he? He was 18 years, eight months, and four days. I'm so sorry. Oh, so sorry, Nicole.

It's been very rough, and I've not been able to return to work full time. So that kind of plays into my equation, too, because obviously I've just been trying to survive, but I'm worried about like my 401k. I haven't, I just recently started making contributions to it again, but I'm only working part time. So I don't know like what the best use of that money is. I want to be smart and honor my son in my choices. For sure. Absolutely. Are you able, working part-time, are you still able to keep everything

afloat with, you know, rent or mortgage or food, bills, all of that? Have you gotten behind on anything? No, I'm not behind on anything. I actually have a very decent hourly rate. I work in the human resources world, and so I'm specialized in one aspect of that. And so I make a decent amount, even though I'm only part-time. Okay. And do you have any other kids that you're supporting? I have an older daughter. I'm not supporting her, but I'd like to factor her into the equation also. Okay. Oh man, Nicole, I'm so sorry.

Do you have any debt right now? I have about $12,000 in credit card debt um and i have a mortgage that's i've got about 128 000 on it okay do you have any money saved i only have like a couple thousand dollars saved i went through a lot of savings okay and what um can i ask cause the twelve thousand dollars of credit card debt what was that on um some of it was um grief honestly some of it was to to pay for final expenses um but the majority of it that's still left is just poor spending, looking for something to occupy my mind. Yeah, sure. Sure. Which is which is understandable. Oh, I'm so sorry. Are you are you in grief counseling? Are you working through that? I am. I have an amazing counselor. So I'm so appreciative of that. But it's just a lifelong

loom that I have to figure out how to live with. So Rachel and I could give you some thoughts. I mean, obviously, we would say, okay, yeah, let's clear out this debt. Let's, you know, make sure you've got a good footing. And, you know, you sure you've got a good footing and, you know, you've got three to six months of expenses. But what do you think? You know, you said you want to do something that honors your son. What do you think that might be? I started a nonprofit in his name and I've been contributing to that. So part of me was thinking of putting some resources into that. And the other part was just providing for my daughter. She's a college graduate. She works in the medical field. So she's,

you know, she is making her own way, but I mean, that was her only sibling. Yeah. Yeah. You know, I, for this, Nicole, I think it would, I think it would feel right to say this amount of money. We always say to do with three, you know, money can do three things. You can give it, you can save it, you can spend it. And I think that would be a beautiful, you know, way to kind of divvy up this, if this, if that's what you want to do. I think it would be honoring to him to pay off this credit card debt. I really do. I don't think that that doesn't feel off to me. That feels like a really wise way to set yourself up and continuing your healing. I can see you saving some on the side for your daughter. Maybe

she may not need it. And I don't want you to do it out of a guilt or a pity necessarily. But maybe you kind of keep some on the side that if something comes up in the future, you're able to bless her in that whatever that looks like for her. And then give some of it to that to that nonprofit that you started. I think that that divvying it up three ways feels feels right in this. And then I would have a plan too for the $60,000 for next year, just to know ahead of time what you're going to do, kind of like a budget that we know, you know, before the month begins, if you will, of where your money's going to go. And I would do that same with the $60,000. And maybe it looks different, that $60,000. Maybe, you know, a year from now, you could say, okay, this amount of money feels right to, you know, maybe, again,

save some for your daughter if you want to do that. Maybe put some at the house if you want to do that. I mean, whatever feels right to you in that moment. But I think staying within those guidelines is a way to, I think, to honor your son. I agree. I agree. I do like that a lot. If I pay my credit cards off, should I put that money towards my house payment as an additional principal payment?

Yes, if there was more that you were divvying in that category, then yes. If there was more there, yeah, put it towards the principal. And maybe you just do all that now with the $40,000 and then maybe when you get the 60, that's when you say, I'll give some of this to charity to get yourself. I think there's something to Nicole about, you know, having that solid financial foundation under you that maybe can give a level of clear headedness to when you get this next sum of money. So maybe, you know,

using some of this for your benefit to set you up well is beautiful. But from I know both of us sitting here as moms, we can't even imagine. Yep. I know you're doing a fantastic job, Nicole. Thanks for calling. Welcome back to the Ramsey show. We're taking your calls at 888-825-5225. So give us a call. Up next, we have Chris in Roanoke. Hey, Chris, welcome to the show. Hey, y'all. How are you doing today? We're doing great. How can we help? So I have a question after reading a little bit from Breaking Free from Broke. In the investing section, it said that we should avoid index funds and instead go for mutual funds. But I know mutual funds have more fees and sometimes they don't beat the index. There's a lot of them out there that don't. So I was wondering if there was a

situation where you would choose an index fund over a mutual fund. Yeah, I didn't know George's words for that. I'm not sure. Well, I can't say yay or nay to that. There are times where we would say choose mutual funds, like when you're investing for your retirement. We just know that over time, because they're actively managed, they're switching out those funds in an attempt to beat the index, right? And so, of course, we want you to have the best rate of return. And you're right. There are a lot out there that don't hold up their end of the bargain, but there are a lot that do.

And I know I'm invested in some and Rachel, you are too. Yeah, for sure. So that's why we would say that now, to your point, index funds are not bad. They're passively managed. And the whole point is they follow whatever index it is. So if it's s&p 500 or if it's um in dow industrial whatever it is there's different ones that they follow and so that is a little bit of um um if you're let's say you were saving for a down payment for a house

and you're like listen i'm not going to buy for another seven or eight years i'm just going to park this money here you could do that and you could kind of know here's the return that I'm going to get. It's kind of like just a place that I'm parking this money in a brokerage account. There's nothing wrong with that, but that wouldn't be my long-term necessarily my long-term investment strategy to just park in index funds. Because if you invest the way that we say over those different, those four different areas, growth, aggressive growth, international, all of those, then you're gonna get that four times mix of a better rate of return. And so that's kind of the thinking there.

Yeah, and again, I think more so for the long-term approach, especially when you're thinking about retirements, mutual funds are, it is a great place to park your money when you're doing all of that because it is spreading it out so much. But again, like Jade said, for a short term we know people you know a vanguard account and they put some money in but i think you want to be careful with what you're doing because a lot with index funds you're doing it yourself and i think there is something to be

said if you don't know it well enough and you're not diversified well enough you know that's where you know some red flags can be raised. But yeah, I wouldn't say it's that we're completely against it by any means. Yeah. Honestly, if you're investing and you're not investing in single stocks, in many ways, I'm just happy that you're doing the muscle of investing. But to Rachel's point, I think we're in the era of TikTok and Instagram, do it yourself. And there's some validity to that. But if you really want the best rate of return, you're working with a professional and you're choosing really great mutual funds. Okay. I guess my question was more because I don't have a lot of margin. And I guess I'm

technically in step seven, but I don't own property. So that's kind of what I'm working for in the long term. So is there a situation? So would that be one of those situations where you might go index funds? I mean, how close are you for a down payment on a house? How many years do you think? Oh, at my current pay rate, which I'm hoping to improve, it might be 10 to 15 years until you have a down payment? Yeah. Yeah. I don't have a lot of margin each month. What do you make a year? I make about 37K. Okay. How old are you? I'm 25. Okay. And what's the market like in Roanoke? Because for first-time homebuyers, we're saying, you know, 5% to 20% down. I haven't really looked around that much because I've been, I've got Ken Coleman's book

at home. I'm trying to get my income up right now. And I just got out of Baby Step 3. So. Yeah, that's great. I figured thinking 10 to 15 years down the road might work out best for me. Okay. I would probably say to be a little bit more aggressive. I think when you get your income up and depending on, yeah, which part of the country you're looking at, you know, a 5% down is great. And I would get into the market as soon as possible with that, with the parameters that it's no more than 25% of your take-home pay and all that. But yeah, I would want to get in more aggressively, Chris, especially if you're going to be somewhere long-term because the faster you can get in, again, reasonably and responsibly, the better off that you're going to be somewhere long term because the faster you can get in again reasonably and responsibly the better off that you're going to be and in that case you know you could yeah you could look into an index fund so you know vanguard or something like that or even just high yield

savings but again that would be I mean if you're saying 10 to 15 years and you're being for real about that which again I'm going to I'm going to challenge you on it then yeah I mean a mutual fund or index fund I mean any of those would be fine but but if but if you on it. Then, yeah, I mean, a mutual fund or index fund, I mean, any of those would be fine. But if you do it sooner, which I would hope that you did. Well, that's assuming that your income doesn't change and it is going to change. You're 25. Your income is going to go up. You know, you've got the right resources.

You're already digging into Ken Coleman's material. So I can tell you your income is going to go up. And I don't know if you have debt or not, but you knock that debt out, that clears up more margin. And so there are definitely things to make that go faster for you. Picking up a side hustle. There's a lot that you can do there. So the 10 to 15 window, I'm with Rachel. I challenge that, but that's just our opinion. Yeah, that's great. Thanks, Chris. Up next, we have Court in lubbock texas hey court welcome to the show hey how are y'all doing great how can we help so i have a question and i don't i mean i'm sure you'll get some people ask this but what are y'all's thoughts on vacation homes that's kind

of what we're thinking about next yeah um i think it's a great goal we've okay we've owned a couple you know rentals and they i mean we kind of made money when we sold. We don't technically make money because insurance now is going crazy. Every time we go to Florida, I talk to owners that live there, and they're talking about how they're making double their mortgage or triple. I know that's subjective, but it just seems like a lot more than what you would expect from a tenant- tenant landlord type situation Yeah, vacation rentals

Are the most volatile So when times are good, it's real good And when times are bad, they're real bad So no I think it's the same rule With any investment property Regardless if it's vacation or just down the road It would be paying cash for it

So that volatility isn't there Really? Golly Because here's the thing, Corey it's vacation or just down the road um it would be it would be paying cash for it so that's that volatility isn't there yeah yep okay because here's the thing court i'm like you know yes again when times are good and you know are people doing this yes they are um but you look back and i'm like i don't know if i'm just cursed from 2007 2008 and everything i'm like they were given houses away and people were getting foreclosed on left and right so do what yeah i said i was still in middle school okay i don't really remember the tear from that yes so i mean i'll remember for you because those are those are the first places that you know that people stop when the economy turns and and again we pray that never happens but again you're putting there's a it's a risky business and again when it does well

yes i i agree there's places in florida for sure they're you're putting, it's a risky business. And again, when it does well, yes, I agree. There's places in Florida for sure. You're renting out like, yeah, probably double the mortgage. But you're being a long distance landlord. You're going to pay management. And again, I think it sounds romantic to say, oh my gosh, we have a beach house in Florida. And then when you go in and there's been eight other families that have slept in your bed you know it just it just it changes the mindset a little bit too so so there's a trying to think of another i mean another income where i don't need extra

income but i need to figure out where to put this yeah i would get i mean do you have do you have what how much money do you have uh i mean i probably like between everything like three four hundred uh cat like liquid liquid or an or an investment yeah oh yeah yeah all liquid yeah yeah so maybe yeah so i would look for a spot i mean if you want the vacation side of it yeah look for somewhere look remote don't go to the hot spots because you're gonna pay four times that um yeah look outside three million just for the starters yeah so or what you could do court if you want to get into real estate in lubbock go buy you know we've owned a few houses there we just didn't really make money until results right now we're living in a super nice

uh lease that we're in a five-year lease right now because i'm so scared to buy a house um you're leasing a house we are but you But you feel okay going and buying a house in Florida? I do, just because we've talked about it for four years. We go four times. Like, I'm leaving tomorrow to go, and I'm talking to another person. But you're living in your house 350 days a year. I know. I know. You are right.

So that's the deal where it's like I just, I run a business. We have six locations, so I kind of travel everywhere okay okay i hear you well what i would say court is i think for you and your family owning your your main property is going to be key long term to have equity and that you don't have to worry about a house payment later down the road because you're going to have everything paid off it'll be self-insured it'll be great and then from there let's look at investment properties paying cash for them local so that you can keep an eye on them, I think is where I would start. But I appreciate the enthusiasm and all of it because one day you could own a house in Florida and pay for it. So that could be a great goal. That's right. Thanks for calling in. Thank you,

America. This is The Ramsey Show. Live from the headquarters of Ramsey Solutions, it's The Ramsey Show, where we help people build wealth, do work that they love, and create amazing relationships. I am Rachel Cruz hosting this hour and taking your calls at 888-825-5225. We'll be taking your calls on life, money, relationships, career. So give us a call again at 888-825-5225. Up next, or up first, I should say, we have Carrie in Buffalo. Hi, Carrie. Is it Carrie or Kari? It's Carrie.

Carrie, welcome to the show. Yeah. Well, thank you for taking my call. So I was divorced two years ago. I'm a single mom. I'm, um, I'm divorced two years ago. I'm a single mom. Um, I'm almost 49. So I'm working as a medical receptionist right now. And I do have a side hustle as an artist as well, where I, you know, I sell my art. Um, and I'm just really having a really hard time, um, financially right now.

Like I've kind of spiraled since my divorce with keeping up and I'm, I have about 20,000 in credit debt right now, plus a car loan. And my living situation is, so I own the home. My, I have a family member that is our mortgage lender though. So we filed an official mortgage. Okay. But so he's kind of put my payments on hold because he knows my situation is crazy, which is not ideal right now. But so your mortgage is on hold right now. Yes.

Okay. Um, I'm just, but I can't keep up with my bills. My minimums are so high now because I have, you know, some of my minimums are like four hundred dollars on my cards and then I have the house bills and my son and I'm just wondering do I file bankruptcy

like what do I do um um so no I would not say you're bankrupt right now um no I know these numbers aren't aren't um impossible okay so how much are you making a year I mean i've only had this job for a few months i was working on my own since my husband moved out doing the art business which was doing okay i was paying my bills but then i was spiraling and it just hasn't been great with the economy people aren't buying as much right so i'm only working three and a half four days a week right now and i need to get more hours okay i'm probably going to look for a full-time job within the next like few weeks i just want to wait till my son's... I just have to figure out what I'm going to do with my kid. It's really tough. For sure. How old is your son? I have to get him off in the morning. Yeah, I have to get

him off to school every morning, which they've been really flexible with. So it's tough because my parents are up in age and I don't want to use them anymore. No, for sure. I put my kids on the bus every morning. So I think what we're going to need is just this plan. Because I can hear you're spiraling. You have a lot of things going on, right? I'm like, you're a single mom. And when you guys were married, did he do most of the finances? He did. And then he ran into some issues with his mental health and some other issues.

And he kind of lost his whole career and his sanity. So I don't receive any child support or alimony um I kind of just wanted him to leave the home so I took on the marital debt which grew a little after he left because it was only my income for so long and um it's just kind of I'm just like at a wall now where like my cards are maxed I can't make the minimums what do I I do? Um, I'm also back on my property taxes this year because they're not escrowed in my mortgage because of the private lending situation. Like I have to save and pay those every year and I didn't have the money this year. So I'm just going to have to keep making payments throughout the year. It's

just like, really, I'm just like backed up against the wall i'm like what yeah i talked to a few attorneys about bankruptcy and they recommended against it because they're like you could lose your house yes well yeah because they're going to come and take all of your assets before and so we want to be able to keep you yes so so here's the thing carrie i think for you to feel stable i think getting your income up is number one okay and you're just starting this new this new business right right? You were in an industry, art, and selling the art, which is great and wonderful. But after a while, it was not paying the bills. So now I think you're facing that reality. So the upside here is that there's a lot of upside to your income, right? You can find, and I would, I would find a full-time 40-hour

week job. And then I want your first priority to be your four walls which is food shelter utilities and transportation because this mortgage is not going to go on hold forever so i do want you to get in a position to know if you're going to be able to keep this house um and if because how much would the mortgage payment be a month if you were paying it um with the taxes it's about $1,300. So I owe about $160 on the house. Okay. Okay. Okay. So if you can paint out a picture yearly, like if you were here a year from now, if

you had to guess, how much do you think between still selling some art if you're doing that at all, but also a full-time job, how much do you think you could bring in? I don't know. I mean, the job I'm working at now is only $18 an hour. It's not much at all. Okay. And most of the positions I've been looking at, they're like $20 an hour. So I would also constantly, would you recommend getting, like, going back to school at night to get my bachelor's because I already have an associate?

No, no, no, no. I don't think education is the problem here. I think it is income. Okay, okay. Yeah, I think you'll be able to get it up. But I think, I mean, honestly, Carrie, I think getting these four walls covered, making sure food before credit cards and all of that are paid, that you and your son are taken care of on the basic level.

And you know, food, shelter, utilities, transportation, you have gas in your car. Do you have a car payment? Yes, I do. I had to get a new car last year. I had like a 15 year old car that finally okay how much how much is your car loan total payment is 365 it's i think i owe 18 on it 18 000 okay if you sold it today how much could you get for it do you think i think it's just about even because i did check the other day okay and no money saved not

so probably nothing i'm like living minute to minute Yeah I hear you I hear you okay so You have the $18,000 car payment you have about $20,000 was that what you said in student loans I'm sorry in credit cards Credit cards And is that it and that's it correct Yes and then the house

Okay and you have no money saved None None savings, okay. So your first goal, what I would do is to get $1,000 ASAP. And again, making sure that your other bills are covered, food, shelter, utilities, transportation. This is before credit cards and everything, okay?

And then I would look at selling your car, Carrie. I really would. And maybe you take out a small $5,000 loan to go get a $5,000 car. But I would rather you have $5,000 in debt than $18,000 with this car, okay? Okay,000 car. But I would rather you have $5,000 in debt than $18,000 with this car. Okay. Okay. And I think that's going to start to give you some level of footing here because I need you to get some quick wins as well. And if you stay on the line, Skylar is going to

pick up and we're going to get you connected with a coach because as a single mom, I mean, I can feel it. I can feel it on you. It's like there's so many decisions that you have to make. But again, I think having some sort of game plan is going to be really, really important. And the budget's going to help with that too. And so I'm going to give you every dollar premium. And this will be our budgeting app that's going to walk through how to do a zero-based budget.

And that's something that's going to help you too, be able to say, hey, here's where my money's coming in. And I have a plan for it. But again, I think getting rid of this car And getting in other cars That's going to free up that payment And that's going to feel So much better it really will

And then cut up the credit cards And start paying these off One at a time So out of the credit cards how many are there There's four Four okay I want you to list those off smallest to largest okay so after you get your thousand dollars your next goal is to pay off that smallest credit card okay okay and so we're going to get you with a financial coach though because i know that there's there's just so many so many elements of this story. And I do not think you're bankrupt, though, Carrie.

I really think if you get your income up and you get a level of stability and consistency with these bills, you get this car out, so you're not dealing with that debt over your head, and you work on getting out of this credit card debt, I mean, you really are going to get some quick wins. And I think that's going to give you a level of confidence, too, Carrie. So stay on the line. Scholar will pick up. But I'm so sorry.

I hope that gives you some level of direction and ideas to get this started because I do see hope for you. This is The Ramsey Show. Welcome back to The Ramsey Show. I am Rachel Cruz taking your calls at this hour at 888-825-5225. And just as we came up on the air on YouTube, my new book, my kid's book, I'm glad for where I am, is out. So you can go to RamseySolutions.com slash store or RachelCruz.com and check that out. We did a little book tour here a few weeks ago

and got to travel around and meet so many of you guys at these signings and sign some books out with the great people out in the lobby, which reminds me, if you are in Nashville, Nashville is such a great place to visit. Come check us out. We're in a sweet little town, Franklin, just south of Nashville.

And so we do this show every day live from one to four with different personalities. And we do it here on the glass so you can come get some coffee and cookies and hang out with us. And it's always fun to meet people from all over. So we're so glad to have you guys here today. And so come and join us. Also, if you are looking to really get control of your money, you guys, one of the best ways to do that is to budget. And budgeting is one of those things that can be really intimidating at first, and it's kind of overwhelming.

But it's one of the keys to winning with money. It really is to be intentional. You know, I am a self-proclaimed spender and a free spirit. Not great when it comes to the details always of life, but I enjoy spending and I'm like, and I want to have freedom in that. And for me, a budget was probably one of the hardest things to grasp onto financially when it comes to all of this stuff. And so I have found though, as a spender and as a free spirit, that it gives me such freedom and such permission to spend money and you do it on purpose with a plan.

And it's more enjoyable when you know where your money's going and what's going on. And so if you've not checked out EveryDollar, this is our budgeting app. You can go to everydollar.com slash Rachel and create your first budget for free. And this is a tool that we designed to really help you. And again, it's one of those things that when you want to tell your money what to do, it's going to those things that when you want to tell your money what to do, it's going to go so much further. It relieves so much stress and so many questions out there with money that you actually have a plan. And EveryDollar Premium is awesome. If you upgrade to that, it connects to your bank account. And so all of your transactions will come in and you can drag

and drop them in the app. It takes like less than a minute a day. And it just keeps a pulse on what's going on with your money. It is so, so key. And it's awesome. So again, you can go to EveryDollar. You can download the app for free in the App Store or Google Play. Or go to EveryDollar.com slash Rachel. All right, let's hit the phones. And we'll go to Jeremiah in Houston.

Hey, Jeremiah. Welcome to the show. Hey, how you doing? Doing great. How can I help? Well, my wife found the show and she's been kind of aggressive about implementing some of this stuff, to say the least. Jeremiah, let me just say, let me just say, Jeremiah, I'm sorry. I'm sorry. Sometimes we are used as a weapon in people's homes we're cuss words sometimes so we're i'm probably more on your team jeremiah just know that so i'm here for you okay yeah all right well here's the thing we're actually we're pretty good financially but um so i'll get straight to

her car is financed um the only debt we have is her car in the house. Her car is financed, but it's at 0%. And we only owe about two years on it. And she wants to just start paying it off. And I don't understand that because, like, I save the money. You know, like, I mean, we have a pretty small budget compared to our income. And I save pretty well. And what we save is earning pretty good interest right now. And she's wanting to pull, like, money out of savings that's earning money to pay this car off early and I can't understand that and then she wants to start paying the house off and the house is financed at two and a quarter

so crazy woman who's she been listening to this is madness Jeremiah this is madness oh man okay well this is so funny because I number one I I love her enthusiasm because I think some people personality wise when they get this taste of like oh my gosh I could have no payments like I don't have to owe anyone anything it is so empowering it's emboldening right it's this this idea of oh my gosh we have the money we can pay this off it's so great and then for other people more of the math nerd Jeremiah, I'm going to put you in this category, you're crunching numbers, right? You're crunching numbers. And you're like, oh my gosh, percentage-wise, I'm going to make more over here.

Why would I do that? Why would I pay off a 2% interest rate on a house when I could be making 10% in the market? That's just crazy. And so mathematically, I hear you. I really do. Mathematically, it makes sense. But here's the deal with money, Jeremiah.

It's about 20% head knowledge. It's about 80% behavior. So much of money is wrapped up, not just in the percentage, you know, the APR and the rates of return, but it is so much in who we are as people and the emotional side and actually looking to see, okay, what would it feel like, number one, to be completely debt-free and don't

owe anyone anything? And then we can have some fun on the math side and said, what if we take those payments that was on the car and then just go crazy for a second in the mortgage? And what if that was freed up and we actually went back and invested that and made a rate of return? And so there's a it's a different way of looking at it, this money stuff. But there is something about not owing anyone anything that gives you so many options, so much freedom, so much peace of mind. And I feel like that's what your wife is starting to feel, would you say? Yeah. Yeah, she is. The problem is, though, is like, I planned on doing this again. Like, as soon as her car was paid off, my car is 12 years old. You know, it's getting there. And, you know, as soon as hers was paid off, I was looking at, you know, shopping around and looking

for something that was 0% and doing this again yeah instead of just pulling you know sixty thousand dollars out of out of savings you know to pay cash for something um yeah how much do you guys have saved how much is liquid on her car? $10,000. Okay. Yeah, so, I mean, in that sense, what you have to realize, too, about the zero interest and cars is, number one, usually it's inventory that they're trying to get rid of,

and you're financing with zero percent interest most of the time through the manufacturer. You're not using a bank or a credit union, and so a lot of the terms on the loan can be and it's really up to them there's not much like negotiating or actually like looking at it and so what we have found is there's actually some risk in it because for some they actually have these fees and penalties that if you miss a payment they actually go all the way back and back charge you interest you'll have penalties you'll have fees and it ends up being this like too good to be true thing and that's

why a lot of people end up falling for the zero percent because they think oh my gosh what a kind manufacturer to do this but what they don't realize is they almost get screwed in the process if they just make one mistake so the zero percent yeah while some people feel like it's a great deal there's still risk involved there, Jeremiah. So I think for you guys, what I want to do, I want to gift you guys Financial Peace University. And I want you to watch it together. I think your wife will be so excited. Jeremiah, you'll have a great weekend. Let me just tell you, if you just say babe, instead of Netflix, let's watch, let's watch these lessons. She'll love it. But really, these are

nine lessons. And again, you could just get through three of them this weekend if you want. But we really do map out. And it's not just an argument for argument's sake of like, oh, get on our side and be debt free. But there's reason for it, Jeremiah, not just from an emotional standpoint like we talked about, but there is a financial benefit that instead of supporting Ford Motor Company, you're supporting yourself. You're putting money back. You're using your income, which is your largest wealth building tool for you and your family versus paying for everybody else. And so we've just found this weird way of thinking. It frees a lot of people in so many ways okay sounds sounds like fun can't wait listen your wife's gonna love me after that suggestion she's like thank you thank you

rachel listen to this every day too so i'm sure she's gonna hear this and now there's no way out of it so funny well you know what i do appreciate about you though because we get a lot of spouses usually it's your wife calling the show and saying my husband refuses to do any of this I don't know how we're going to get on the same page and you're stepping out in good faith right and extending a little bit of an olive branch to say hey I kind of want to learn this like I want to I'm curious right and so keep that curiosity open Jeremiah let me just say that as some encouragement because I can tell you this isn't really just theory and our opinion on stuff. I mean, millions of people have done this. They've gotten on this plan. They've gotten in control of the money. And for the first time,

they're actually seeing their money work for them. And that's what I want for you guys. Thanks for the call. Welcome back to The Ramsey Show. I'm Rachel Cruz hosting this hour and taking your calls. Up next, we have Dylan in Portland. Hey, Dylan. Welcome to the show. Hi, Rachel. How are you doing?

Doing great. How can I help? So my wife and I are expecting a kid soon in September. Congratulations. Thank you. Is it the first? We kid soon in September. Congratulations. Thank you. Is it the first? We're kind of wondering. Sorry, say again.

Is it the first? It is our first. Yeah. Baby number one. That's great. Well, congratulations. Thank you. So right now we both work and we're kind of trying to figure out how we're going to afford

to save for a home after she stops working. After she stops working. Yeah. Okay. So where are you guys at financially right now? Like debt, savings, where are you? We're really well off. We have probably 120 in savings. And then we have about 40,000 in debt. We bought a new car recently. So that's financed at $20,000 and then I have $20,000 in student loans. And I have the ability to pay those off, but then that would take away from my savings and possible home down payment in the future.

And then we're really good off, yeah. How much do you guys make a year? Right now we make like 160. But after the baby comes, we'll be making, just me will be working, I'll be making 90. 90,000. Okay. And I have the homes you've been looking at. What are the price ranges right now?

A standard home is really, really a lot of of money so right now we have a home already oh okay um we're looking for like a bigger one in like a single family home um because i own like a condo now um and they're in like the five to six hundred thousand dollar range okay how much is your condo worth now uh 3 370 and how much do you guys owe on it 300 300 okay yeah i mean here's the hard thing about here's the hard thing about money sometimes dylan is the math it doesn't have emotion you know it is what it is and so when you cut your income in half which i'm not disagreeing with you in that life decision by any means, it's going to limit your choices. It's going to slow down your financial goals, right? And so I think one of the best things that you can do, what I, we always say it's kind of stork mode right now while you are pregnant, where you guys are pregnant, have the

baby. And once mom's home and good, baby's home and is is good then I would press play on this process and what I would do is just walk you down the baby steps and so you guys have you're in a really great position in a way because you have so much money saved and that 120 is that all liquid like you guys can get to that that's not retirement yeah that's all liquid okay so i mean if i were you guys after baby comes in september i would continue to save because how much are you guys saving a month would you say and margin wise in your budget yeah we could probably save like easily two thousand okay yeah twenty five hundred okay that's great so yeah so i mean i would i would continue to do that savings mentality, keep putting money away. And then once baby's here, good, everyone's good. I would take, yeah, I would take 40,000 of that 120.

That'll leave you with 80 grand left, but I would go ahead and pay off the car. I would pay off the student loan. And the car, I mean, you guys are going down to 90K and we always say not to have motors, anything with motors and wheels, more than 50% of your annual income. By you guys cutting your income in half, this may be too much car. We just bought it.

It's a $30,000 car. We put $10,000 down and we just bought it. You could sell it for $40,000? No, it's worth $30,000. It's worth 30 it's worth 30 but you owe 40 on it no i so we bought 20 000 i'm sorry i was looking at the wrong number on my on my notes i'm so sorry yeah yeah i hear you um put 10 down yeah finance 20 okay because i mean right now with her not working or her you guys going down this may there's there's a chance that this is is too much but I mean you you would be able to pay it off because you have the cash so I would

say keep the car but I would pay it off I would pay the car off the 20,000 and the student loans once the baby comes I would be debt free I would build up an emergency fund of probably six months worth since you have a new baby and so I would do your monthly budget and just say, okay, what our expenses are per month. And I would do times five, times six, you know, five to six months worth and put that just in a good high yield savings account and then see what's left. Because out of that 80 grand,

how much do you think you guys would need for an emergency fund? Probably, we could put like 20 or 25 away. Would feel good. for that so that leaves you 60 grand and then and then by that point that's when i would start thinking about the house then and um yeah i mean it's stuff it is just so it's so expensive and your interest rate right now is what at two percent three percent yeah at the condo yeah i have a two percent yeah and i mean i'm just curious is it a two bedroom what what's the what's the scenario it is a two bedroom yeah so it's a two bedroom but we're looking to have like two to three more kids

um in the next couple years so that's why it's like planning now for like a larger home in the next couple years um but again houses are so expensive that it's really hard to afford a monthly payment on one income and to put enough down to where that monthly payment's so low. What's your monthly payment on the condo right now? $1,500. Okay, that's great. Yeah, I mean, honestly, Dylan, if I were you guys, you're going to have so much life change with this new baby. And considering where you guys are financially and cutting that income in half, I would slow walk this I really would, I would continue to pay down on your mortgage on the condo, build in some equity that way. And then on the side be saving up for another good down payment and then maybe look up I mean, it's it's going to be a slower process than probably what you want. And I know you guys want more kids in the future and all of that, but that's going to be in two, three years right down the road when that starts to happen. So I almost would say to stay where you are and then as your family continues to expand, then see where

you guys are financially. But I would not be in a rush to get out of this. I think, again, being in the market is great and you're at a great rate right now. And the whole thing is just the idea of wanting more room. But I don't know. I would just say you're not going to be in a financial position to do that. Would you agree? Yeah. I think that's kind of what I'm trying to get over

is like that was our long-term plan. Yeah. But it's really not going to be like that was our long-term plan. Yeah. But it's really not going to be capable after we go down to one income. Yeah. Yeah. So I'm trying to figure out still how to do it, though. But I don't want to put myself in a bad position. No, you don't.

And I think the piece that making a life decision like what you guys are doing for her to be home, it's kind of one of those tradeoffs. And I think it's a beautiful tradeoff. Right. I think it's it's fantastic for your family. It's something that you guys value. And I think that's I applaud that. And so with that decision, other decisions are going to have to shift. And, you know, and I think that that's OK. And, you know, how old are you guys? I'm 24 and she's 22. Yes. Okay. Dylan, you're good.

You're good. You got plenty of time. Let me just tell you, just, I would enjoy this time. Do not stress yourself out trying to think of, oh my gosh, we got to upgrade houses. We're going to, and you end up making a poor decision and getting into a house that is over your head, you know, with a monthly payment. You guys are in a really great spot right now. And I would just enjoy it. Enjoy your life. And this is where some of that contentment comes in

of like, I mean, bigger isn't always better, right? I mean, if it starts to really, you know, tighten up the budget and it really starts to stress you guys out, then that house, what could be isn't worth it, right? It's not worth that peace of mind. And so there is power in saying, gosh, we can just stay where we are enjoy where we're at but have a long-term plan have a have a four-year goal of having a certain amount of money saved knowing that you're going to have some great equity in this condo and then move up and home after that yeah okay that's what yeah that's what i would say was your wife how is she with all of this is she is

she itching to move too um yeah she wants to she's more worried about when we have our next kid which would probably be like in the next two years so she's perfectly fine and like understandable that um we won't have that much money and she'll probably get a part-time job to like help with that but it's still it's so much money in the interest rate, of course, will probably go down. But it's the monthly is just absolutely insane. Yeah. So yeah, well, I would, you know, I think for sure, you know, I think you guys are in a really a great spot seasonal life wise, you are been really great financially, I would pay off this debt, get that out, have some breathing room, enjoy the baby, enjoy the condo, be where you guys are. And then when

the next step comes, that's what you can plan for. So have a goal, have a four-year goal out there. But I think it's great. You guys are doing an awesome job. Thanks for the call. Our scripture today comes from Proverbs 21.5. The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to poverty. I like that. The diligent prosper, right? Being consistent in all this, but hastiness only leads to poverty. Franklin D. Roosevelt said, thank you, James, for this. In politics, nothing happens by accident. If it happens, you can bet it was planned that way. To a great conspiracy theorist, FDR. Just really?

We know. We know how all this works, y'all. We know. Oh, so great. Okay, before we go to the calls you can't see them in there unless y'all have the studio studio camera but Austin Shelby there he is behind James Austin he has been a producer you guys here at Ramsey for multiple years he actually worked on my show the Rachel Cruz show show, when he very first started. And then he moved on to, he was at Entree Leadership,

the Christy Wright show, when Christy was here. And then has been here on the Ramsey show, Behind the Glass. He will produce when James is out of town or gone. And this is his last day. And we are just, we're so tearful.

So if you can just hear me choking up over here, the heart. But we're thankful. Thankful So if you can just hear me choking up over here, the heart. But we're thankful, thankful for Austin. Always thankful for a great team. There's a lot of people behind the scenes that make this show happen. And they become part of the family. You get to know people in such a great way. And so, Austin, you will be missed.

Thanks for all that you do. Last day, last segment of the show. Yes, thanks, Austin. And his Buc for all that you do. Last day. Last segment of the show. Yes. Thanks Austin. And his Bucky's. Hawaiian. Button up shirts. God bless you. God bless you.

All right. Going to the phones. We have. Is it Natia. In Chicago. Hey. Welcome to the show. Hi.

It's Annetta. Oh Annetta. I'm sorry. Annetta. You know what. They phonetically spelled it out. And I think I just. Completely. Busted that. I'm sorry, Annetta. You know what? They phonetically spelled it out, and I think I just completely busted that. I'm so sorry.

I apologize. I hate when people mispronounce names, so forgive me. But thanks for calling. How can I help? Yeah, so I'm kind of in a situation where I'll say, like, I'm asset rich, but cash poor. And I've reached a point in my life where I, I kind of don't, don't know which way to take to get out of that. Okay. So I just discovered the Ramsey show maybe about, I'd say about six months ago. And this was after I had kind of built all my wealth. And I did that. I served in the military for 12 years. So I would take all my bonuses and reenlistment bonuses, put it in a brokerage account.

I invested in stocks that grew amazingly. Then I purchased 22 acres of land back in 2022 in New Mexico. And then New Mexico legalized cannabis, and the value of that shot up. So I've made a lot of good decisions, but it's like when I looked at my possibly expenses, I was like, oh, this is why I'm feeling the squeeze, you know, because we were doing a lot of like door dash,

nails and toes, pedicures. Yeah. I have household staff, like a groundskeeper, a maid that comes, things like that. And then I do own a home. And so I'm like, I feel like I'm living paycheck to paycheck. When you were talking about pedicures and manicures, you mean they come to you and you get them done and you have like a staff at the house. Is that what you were saying for you?

Well, I go and get manicures and pedicures. Oh, okay. My daughter. I hear you. So you're saying you live great, but yet it's still paycheck to paycheck. But it's still paycheck to paycheck. Yeah. And I was wondering what to do because I have this 22 acres of land sitting here that I really wanted to pass to my children.

But I'm wondering, should I just go ahead and sell that to pay off my house and minimize some of my expenses? Yeah. I'm just so torn about it. For sure. No, I hear you. Yeah. I mean, I think regardless of the land, I'd want you to get in a place where your income supports your lifestyle, right? And living below your means may mean that there's a level of your income, you know, that where it's

at and that you possibly are living right at that cusp. And that is stressful, right? It is stressful. And so that may mean pulling back on some of the expenses so that you don't have to door dash and all of that. Right. I mean, not that you can't enjoy life, but there may be a prioritization list going on that we can kind of walk through. But the 22 acres in New Mexico, what did you buy it for and what's it worth now? So when I originally bought it, I did seller financing. So I put about $10,000 down and then I paid it, and it came out to a total of about $30,000 in total, and it was unimproved land. And then since then, I've had it improved, had it fotted and leveled, and so that made the value of it go up. And I've had companies reach out to me to purchase it for cannabis, you know, farming and things like that.

For how much? Oh, gosh. I think I had one. The latest offer I got was like $100,000 for it. Okay. Yeah. That's great. So it's been, yeah, three times what you bought it for.

And did you buy, I'm just confused, 22 acres in New Mexico. Was that just because it was a great deal or did you plan on moving there or what was the... Well, I was living there at the moment and I was just kind of watching a lot of podcasts and stuff about real estate investing and this is how you can get into it and you could start with land and i was like oh that's kind of cool and so then i discovered seller financing and i was able to buy it that way and i get into it yeah yeah i was able to get into it okay so so you have a hundred thousand dollars and it's paid for correct yeah that's completely so you have a hundred thousand dollars worth of land how much are in your stocks and brokerage accounts that you could get out right now if you needed to? That's liquid.

The brokerage account is about $200,000. The 401k, I have like $50,000 in my 401k. Okay. My savings, I have like $5,000 it's not much there do you have any debt? I do so once I reached my status

I kind of got happy oh my god so I went and purchased like a 2022 Mercedes yeah you did so how much do you owe on that? I owe, I just bought it maybe like a year ago. So I owe like $40,000 left on it.

Okay. How much is that car payment a month? That is, I pay about $500 a month for that. Okay. So you have that debt. What else? Yeah. And then I have, I don't month for that. Okay. So you have that debt. What else? Yeah. And then I have, I don't have any credit card debt.

I paid that off. Okay. My son has a car. I don't have any. I paid off my student loans. Your friend has a car. Did you co-sign? My son.

Your son. Oh, I'm sorry. I think I said your friend. Okay. Yeah. And I help him pay his car note. How much does he owe on it? I think he has like $10,000 left on his car.

Is that in his name or your name? It's in his name. His name. Okay. Okay. Yeah. And how much do you make a year? I make about $70,000 a year. Okay. All right. So we had some good news and bad news i feel like in your situation there's a lot of upside here but then there's also these money habits that i need i want you to kind of

get in control of that i think is going to give you some peace of mind so um okay first and foremost rule of thumb never have anything with motors and wheels that's more than half of your annual income so you bought too much car you bought too much car not that you can't get a mercedes get a used one but i would look to see yeah i would i think that's that you're gonna feel that um so if i were you because you're yeah you don't have much margin right now is what you were saying and so being able to free up a 500 car payment a month and i would go down in car. I mean, how much could you get for it if you sold it today?

Ooh, I don't know. I haven't checked Kelly B. Okay, I would do that. That's on your list. Okay, so as you end this call, and I want you to really contemplate that. And not that you can never get a great car, okay? But the thing is, what you could do if you wanted to,

if you wanted to take some of this money out of your brokerage account to pay for it, but you're taking money out that you're going to have to pay taxes on and all of that. So I don't think that that would be wise. I would get the car out, honestly. And then I would make a budget on living on less than $70,000. And that's going to change your lifestyle. But look to see, hey, if you want to cash out some of this, again, for the medium side, if you want to, you can. But I would really, really encourage you to get that lifestyle under that $70,000. I think that's going to give you breathing room.

So that may be cutting some expenses. But thanks for the call. Hey folks, Dave here. We'll be right back. You'll get real talk about life, relationships, money, and your career. Plus, the app lets you browse by topic like debt, business, or selling your home. Get the content you want whenever and wherever you want to listen. Download the Ramsey Network app today.