The Ramsey Show - Quit Paying for Yesterday's Mistakes

Starting point is 00:00:02 Brought to you by the Every Dollar app. Start budgeting for free today. Normal is broke and common sense is weird, so we're here to help you transform your life. From the Ramsey Network in the Fair Winds Credit Union Studio, this is The Ramsey Show. I'm Dave Ramsey, your host, Jade Washaal, number one, best-selling author. Ramsey personality is my co-host today. Open phones here at AAA 8255-225. Most of you know I'm. I'm a lifelong Tennessean that our studios operate in Franklin, Tennessee, and just south of Nashville, and many people drop by. There are several people sitting out here today watching us.

Starting point is 00:00:52 We do the show from one to four live. Come visit us. And lifelong Nashvilleian as well, which means that as our radio career has grown and whatever else I do around here, a career has grown. I've gotten to know and become friends with a lot of the country music folks around Nashville, particularly of my generation. I don't know a lot of the younger ones as well because I'm not that cool. But I know a few of them. But, you know, one of the things I've learned over the years of working with the country music community is there's a few twerps,

Starting point is 00:01:29 but most of them are incredible people. The absolute queen of the state of Tennessee and of all the country music artists would have been Dolly Pardon. And I just heard a moment ago that she just passed away. And I'm heartbroken. And as all of the world is, I'm sure, but certainly Tennesseans and those of us who, she was an absolutely amazing woman behind the scenes as well as on the stage. phenomenal business mind, absolute genius at business and very well accomplished in the boardroom as much as on the stage.

Starting point is 00:02:14 The things that she has pulled off and Dolly Wood among them and many, many other things, and the other thing that she's most known for among those of us, I didn't know her, but I knew half a degree of separation 46 times. and incredibly generous. Every child in the state of Tennessee gets a free book every year from the Dolly Pardin Foundation. She wanted to encourage reading. She grew up in Severeville, Tennessee in the mountains of East Tennessee, and reading was a privilege, not an automatic entitlement.

Starting point is 00:02:53 And so she wanted to make sure children, regardless of their, economic circumstances had that. And I think the third thing that comes to mind when I think of Dolly is, I mean, the fourth is the performances and the absolute incredible world class talent in movie and on stage and everything else. But she, as much as anybody I've ever known in that business, stayed completely out of any kind of politics or social issues. She just said, I just love you. and you're going to have to just accept that. But we're not going to talk about who I voted for, and we're not going to talk about your social agenda,

Starting point is 00:03:35 conservative or liberal, because I just love you. And nobody except the ones closest to her know what she actually believed on those things. And because that was not who she was, and she didn't care. She said, that's not my job. And she was really, really good at her job. And her job was being Dolly, the only one ever.

Starting point is 00:03:54 I mean, there's very few people you can say, a singular name like Dolly, a single first name, and you don't even have to say the last name. And as a performer, you had to be really, you had to have seen her and watched her many times. Oh, absolutely. I mean, I don't have a long list of things to say, but I will say the world that I know needed certain people in it. and when they leave, it doesn't feel quite right. And it's people like Prince. It's people like Dolly Parton. It's people like Michael Jackson.

Starting point is 00:04:32 And when somebody like Dolly Parton leaves the world, you go, oh, it just doesn't feel right because they shaped the world that I saw. Leaves a hole. Yeah. An irreplaceable hole. Yeah. That's true. And in all cases that you mentioned, force of nature. Yeah.

Starting point is 00:04:47 Absolute force of nature. And just incredible. So, Ramsey's show is grieving with. with our friends and our neighbors and her husband today and honoring her as best we can from this distance. But, wow. You know, she was scheduled to come on here several different times to do books and things that she had coming out. And it just never worked out.

Starting point is 00:05:14 Something would blow up and at the last minute get changed and everything else. And I, you know, people ask me all the time, you've met a lot of people. Who's the one person you've never met? And I always say, Dolly. And I never made it. I never made it. So I regret that. And I know so many people that are close friends.

Starting point is 00:05:30 And I should have forced the issue, I guess. But I didn't. I regret that at this moment. I can tell you that. So, but anyway, the only way I can drop the name is she lives about five miles from, lived about five miles from me. And everybody knew where she lived. I mean, you know.

Starting point is 00:05:48 And, but just see her, people would see her at the grocery store. She wasn't recognizable. She said it takes about three hours to look like this. That was her line. And so pretty incredible. So gosh, makes me want to tear up. But okay. Open phones here at AAA 825-5-2-2-25.

Starting point is 00:06:09 By the time some of you hear this, that will be old news. But such is the business that Jade and I are in. And we're going to take the moment on the microphone anyway. Absolutely. Aaron is with us in Nashville. Hey, Aaron, what's up? Hi, how are you guys doing? Better than we deserve.

Starting point is 00:06:24 What's up? So I have been Davis for pretty much my entire adult life. You know, tried to avoid bad debt, only took out, quote-unquote, good death. And just over the last year, I finally realized that just the way my mind works, I want to be 100% in on the baby steps. and so part of Welcome to the tribe Thank you

Starting point is 00:06:56 and so one of the mistakes I made and this both of these were relatively recent and so I bought a home would have been three years ago now on a 30% or a 30 year mortgage and I only put

Starting point is 00:07:14 5% down and so I don't have a ton of equity and two of the other mistakes I made were a year and a half ago I bought a brand new minivan and probably about six months ago I bought a year old vehicle and they are both now paid off. I'm on baby step four, five, and six. What are they worth? And so combined they are worth about $56,000. What's your household income? $180,000. Okay. No, I would not sell. I would just start working the baby steps and pay off your house. I would keep the cars.

Starting point is 00:07:52 You don't hate the cars, do you? No, we love them. You just want to be all in. You just want to be all in and do it right now, not ish. And keeping them is not ish. It goes by our guidelines. You agree, Jay? Yeah, I agree.

Starting point is 00:08:07 You make $180,000 a year. We say that things with wheels and motors should not be more than half of your annual income. And so you're under that line. And so, yeah, all's fair in love and keeping the cars. This show is sponsored by BetterHelp. Hey, my friends at BetterHelp just released their annual state of stigma report. It's full of all sorts of data about why so many people avoid getting the help they need for their mental and emotional health challenges. And here's a data point that stood out to me.

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Starting point is 00:10:00 That's BetterHelp. H-E-L-P.com slash Ramsey. Dean is in Houston. Hey, Dean, how are you? Hey, Dave. How are y'all doing today? Better than I deserve. What's up?

Starting point is 00:10:30 All right. So I've accumulated about $100,000 in debt, and I'm wondering if Chapter 7 is going to be the best way to kind of take care of that. It's never the best way. It is a way, and it's a very painful way. When you first start thinking about and looking at it, it feels like it's not painful. I've been through it, and I wouldn't wish it on my worst enemy. What kind of debt do you have?

Starting point is 00:10:55 What kind of is the $100,000? So about $32,000 is hospital and have $10,000 in student loans. And the biggest chunk of it is from a car accident I got into without insurance. And so 32 is 42. So that's like $65,000 or $68,000? And then there's another $12,000 and just another debt my apartment got broken into, and we just didn't deal with it the correct way. So you did not have insurance on your car?

Starting point is 00:11:33 Correct. Why? It was just pretty expensive at the time, and I know it's just an excuse. But like $60,000 expensive, yeah. Same with the renter's insurance. You didn't have renter's insurance. Is that what caused the $12,000 on the apartment? Well, we did have renters insurance, but it was a $2,500 deductible,

Starting point is 00:11:54 and they were trying to charge us much more than that. And at the time, my fiance and I, we had a baby on the way, so we didn't have enough cash to fix the door and pay rent, so we ended up just getting a new place. Got it. All right. So 60,000 approximately on the car debt. All right.

Starting point is 00:12:16 And what do you guys make for a living? How much do you make? I bring in somewhere around 72, self-employed. And your wife? My fiancé, she makes around 30. Okay. What kind of self-employed work do you do? What is it?

Starting point is 00:12:35 I run a handyman business. Okay, good. That means you can do a lot of that. What about your fiancé? What kind of work does she do? She works in health and beauty. What's that mean? She's an esthetician.

Starting point is 00:12:47 She's a waxer, yeah. Okay. When's the wedding? Not sure. I've been kind of stacking up cash right now. I have about $20,000 in cashed. Is all this in your name? Yes.

Starting point is 00:13:01 Okay. None of it's in her name. Correct. Okay. All right. Well, I view banks. bankruptcy like in the same bucket as divorce. You do every possible thing you can to avoid it. And then sometimes you can't anyway. But you do every, you try everything. You leave it all on the field.

Starting point is 00:13:30 And then if you file, you don't have quite the sense of regret or guilt that you would have if you just file. Okay. Now, if you file chapter 7. bankruptcy, you're self-employed making $72,000 a year. Your student loan is not bankruptable, so it's going to be there regardless. Okay. The rest of this can probably be wiped out if you pass what's called the means test, and the attorney can tell you that. They check to see if based on your income, you could pay something towards your debt.

Starting point is 00:14:06 If you can pay something towards your debt based on this mathematical formula that's in the legal system, then they will not allow you to file chapter 7. They will put you into a chapter 13 where you pay minimum, you pay a certain number of dollars, a certain, and say, say your 100,000, your 90,000, because student loans aren't in it, are repaid at a 40% rate for only 40,000 of it's repaid or or whatever, and it's over five years, okay? And it takes forever. And it's a pain in the butt. And so I'm a little bit afraid you're going to bump into that with your income being pretty decent. I might be wrong, but I don't know in Texas what the guidelines are going to be on the means test. And so you're going to have to find that out if you want to investigate this further.

Starting point is 00:14:57 What I will tell you is that with $20,000, you can probably clean up, you can probably clean up most of this debt. You can probably pay this debt off at somewhere around, if you could pay it off at somewhere around 20 cents on the dollar, you could be debt free by negotiating each one of these to 20 cents on the dollar. Now, some of them are going to be a little more, some of them are going to be a little less. But when a debt buyer buys old credit card debt, for instance, bad debt, they typically buy it at a nickel on the dollar. and we see we see these deals settled all the time for pennies on the dollar and you could take the $20,000 and work your way through it. That's one way you could go at this. So in the words, I think if you called the car wreck, I assume that's an insurance company, right? Who do you owe the money to, State Farm or who? Yeah, it was progressive and then they ended up selling it

Starting point is 00:16:01 to a company. I tried really, really hard negotiating with them, but they didn't come down any. How old is it? It's from 2022. Yeah, we'll call them again. It's been a while. You tried at the time really, really hard, but now they've been sitting on this and they haven't gotten a dadgum dime, and you call up and go, hey, I've got a little money, but I'm going to file chapter 7, and you're going to get nothing. So, instead of doing that, let's cut a deal.

Starting point is 00:16:31 deal and I'll offer you $6,000 for this position. And then let's start the negotiation. And I'll bet you can settle it for, you know, somewhere around $10,000, really, $10,000 or $15,000, somewhere in there. That's, you know, it's since 2022. All you've got to do, Dean, is put yourself in that company's position. They bought a bad debt from Progressive from a 24-year-old guy who wrecked his car and didn't even have insurance. they don't expect to collect anything. Well, they paid almost nothing for it.

Starting point is 00:17:04 They paid almost nothing for it, and they don't really expect to collect anything. So anything they get is going to be like, wow, we just scored. That's where they're coming from. Now, they're not going to act like that when you call them, but that's where they are. They probably paid $2,000, $3,000 for this debt. Got it. Okay? So I'm going to try all of that.

Starting point is 00:17:28 And that will definitely work with them. medical. I was going to say same thing with the medical. The medical, it'll definitely work. And I think you can clean up the vast majority of this for the round 20 grand. And what you can't clean up, you can put on payments and work out. That's what I would do. That'd be my first choice. Also, before you do anything, I'm going to put you on hold and Christian's going to hook you up with Guardian litigation, which is one of our sponsors, and they negotiate with all kinds of debt. I don't know that they can help with your unusual mix. But you can ask them. and we can ask them for you. They're a sponsor of ours. They typically take somebody's got

Starting point is 00:18:05 50 or $100,000 with a credit card debt, and it's just a little bit behind, and they're freaking out, and they think they're bankrupt and they're not, and they can work through those deals real easy. It's what they do. But they might be able to help with this, and we'll give them a shot at it. But if they say, hey, Dean, it's really not our thing. Then if I'm you, I'm going to go settle most of this for this $20,000. And by the way, you can get married for free at the Justice of the Peace this weekend. But I would not get married this weekend if you're thinking about filing bankruptcy. I would wait until bankruptcy is off the table because you're making some progress on some of these negotiations. And you need that 20,000 cash.

Starting point is 00:18:48 Yeah, you need it to. And by the way, I don't know what the personal exemption is in Texas. in Tennessee, it's $7,500. If you have more than $7,500, you have to throw it in the pot and lose it. And in Texas, it might be $15,000. It might be $20. Texas has homestead exemption unlimited. If you own a home in Texas, you get to keep it regardless of what it costs or how much is worth.

Starting point is 00:19:16 And Florida does. They're the only two states that have that in a Chapter 7. But look all of that up. Look up your personal exemption in a Chapter 7. You may be losing the $20,000. anyway, or a large portion of it. So let's work on settling it. Let's work on guardian litigation and spend five months, three months fighting and arguing with these people. And let's get this out of your life. Oh, and buy insurance. A lot of banks are happy to hold your money. But Fairwin's

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Starting point is 00:21:26 on my memory. So Texas allows up to $50,000 in personal assets. So he gets to keep his $20,000 if he files Chapter 7. That's pretty... And they allow unlimited on your personal residence. So you can own a $2 million home that's paid for, file bankruptcy hypothetically on $20,000 worth of credit card debt. And you'd have to prove that you can't pay it. You have to pass the means test. But you keep... the $2 million home and up to $50,000 worth of cash and our personal assets. Okay. Now, when I filed in Tennessee in 1988, our personal exemption was $7,500, and that's what I quoted a while ago.

Starting point is 00:22:10 That's what I went and looked up. It's been raised to $10,000 now. And the personal, and you can keep up to $35,000 worth of home equity. You'd think it'd be more of a sliding scale based on the amount of debt that they're trying to bankrupt. I don't know. You know, the idea is you get to come out of bankruptcy with something to start fresh. It's called a fresh start concept.

Starting point is 00:22:35 Got you. Okay. And so that's where the homestead exemption and the personal exemption come from in a chapter seven, which chapter seven is the atom bomb. You drop on the on your life. And that's that. You know, and it's just nothing left but ashes and whatever your little personal exemption is. And so, you know, what do you get to keep?

Starting point is 00:22:54 50,000 in your home, though, ain't bad, is all I'm saying. saying. Yeah. No, it's 35,000 now in Tennessee. Uh-huh. But in Texas. So in Texas, it's unlimited. 50,000 in cash, and unlimited on your home. And Florida is unlimited on your home as well. As long as you've owned it, 1,215 days for three years, in other words. So that was weird. I've never seen that before. Yeah. So if you've owned your home, it has a couple of other little guidelines on there in Florida. But all other states have something like Tennessee where you get to keep a certain amount of equity. So when we filed, I think we had about $25,000. of equity maybe in our home. And we got to keep, you know, our furniture that would have brought

Starting point is 00:23:33 $2,000 at a garage sale, because that's all that was left. Everything else was already gone by the time we filed. We sold everything trying to not file bankruptcy. And we were so scared we couldn't breathe. But yeah, we kept that home. But you have to re-sign for the payment. You don't get to waive the mortgage. So I got to reaffirm the debt on the house and kept the mortgage. Wow. And, um, you know, started with nothing, basically. I mean, $10,000 or $7,500 is basically nothing. And so start fresh again. That's the idea behind it. So interesting. Very interesting. So when you think about bankruptcy folks, you need to understand there's about, I think there's, you may have seen the stuff. Sometimes it pops up on the internet. I used to see the list before there was an internet.

Starting point is 00:24:18 10 things that if you have more than two or three of these things in a 24-month period of time, you're probably going to be in the hospital. The 10 huge tragedies of life, you know. So divorce, loss of a child, loss of a parent, bankruptcy is on that list. And so you're entering into the list of one of the most serious things that can happen in your life. And so it's not to be taken lightly. And we don't tell people to file bankruptcy on this show. We give you five ways you can avoid it.

Starting point is 00:24:53 And we say, I understand. we're going to love you whether you file or you don't file. Sometimes if it's a ridiculous situation, we'll yell at you, yeah. For your own sake. But, you know, if you owe $6,000 and you hadn't had a job in two months and you want to file bankruptcy, I'm like, dude, it costs $2,000 to file bankruptcy. It's just stupid. Go get a job.

Starting point is 00:25:14 You know, I mean, we're just going to get all over you, right, for your own sake. So you got to, the trick is the bankruptcy relieves the pressure today only. It does not fix the problem in your own. mirror. And I would imagine it just sucks the confidence out of you. It sucks the spirit out of you. Man, I just was, I was not only broke. I was broken. But it was a spiritual thing with me as well. Yeah, I can imagine. So it took a while to rebuild after that. And but yeah, and, you know, what it does to your relationships and what it does to everything else. And, you know, you walk down the street,

Starting point is 00:25:53 you see that person that didn't get paid. know, all that kind of stuff. And that stuff happens. All right, Catherine is in Fort Worth, Texas. Hi, Catherine. How are you? I'm good. How are you? Better than I deserve. What's up? Okay. In a nutshell, my question is just, how do I go about compromising with my husband in our budgeting when it comes to tithing? He doesn't really agree with it. And I have, I'm being honest, I'm not really willing to budge right now, but it's like, I'm tired. It's a monthly argument, and I'm just like, okay, I'm over this. Do you tithing typically comes from someone that's an evangelical Christian or Orthodox Jewish?

Starting point is 00:26:38 Yeah, are you both those things, either of those things? No. Okay, so I'm guessing you are and he's not. Well, no, I'm not, like I guess I wouldn't consider myself an evangelical Christian, but I mean, I do believe, you know, that God calls us to be cheerful givers, Okay. You attend a church? Yes.

Starting point is 00:27:01 No. You hesitated. You don't either, do you? Oh, I do. You said, do I attend the church? Yes. Yes. Yes.

Starting point is 00:27:09 Okay. But he doesn't. He has kind of chosen that he doesn't want to. Okay. Yeah. This is the problem, not the tith. I agree. So, again, context, we are rebuilding after him, like, wanting a divorce and all the other kind of

Starting point is 00:27:25 things. And like for a long, like at the beginning of our marriage was a problem, I got tired of the fighting, so I just stopped tithing. And then whenever the divorce situation came about, then we kind of were doing our own separate thing. And that's when I started tithing again. Now that we're trying to come back together, it's a like, basically I'm just like, this is what I feel called to do. And I don't really necessarily know how to compromise about it. Like how does I feel, let me just ask this. And I know you've been approaching it from one way. this is just hypothetical. If you had said, I'd like to give some money to this charity or to this foundation,

Starting point is 00:28:01 how would he have felt about that just general charitable giving, not tied to something that has a religious space like tithing? How would he have felt about that? Just generosity. I can't say for certain. I don't really know. Okay. I'd want to know that because I'd want to know that there's some piece of generosity

Starting point is 00:28:20 that lives inside of this person. And if there's not, I'd want to get to the bottom of that. because that speaks depths about them. So I'd be curious about that. I also want to know how long have you been married? Now it's eight years. Okay. Let me back up then.

Starting point is 00:28:36 Let's pan back a second. So evangelical Christian means Bible believing. Oh, okay. And so we would take our instruction on this question from Scripture. Okay. And we can go into what we call the Old Testament, what our Jewish friends call the Bible, the Talmud, right? And find it all over the place.

Starting point is 00:28:58 We can also find it in Jesus' own words to tithe, to give a tenth. But in nowhere is it a salvation issue, and nowhere is it a I gain entrance to heaven because of my giving a tithe. God loves tithers, he loves non-tithers. It's not a sin to not tithe. But your Heavenly Father, who's crazy about you, says, the best way to live your life, my daughter, is to be giving steadily, and the baseline to start with your generosity is a tenth to your local house of worship, which follows the Old Testament

Starting point is 00:29:36 guideline of the storehouse. The Levites were provided for the pastors, the priests, were provided for the rabbis, and the widows and the orphans were provided for from the storehouse. And so bring a tenth to the storehouse, the Old Testament says. And so that's where the model comes from. That's the teaching. Now, then pan back and say, in your situation, what matters? This doesn't matter at all. No.

Starting point is 00:30:03 I wouldn't die on this hill. And the more, honestly, the more you argue about it, the more he's probably going to dig his heels in. And this is never going to happen based off of an argument. He's never going to become generous. The tithe should be the result of your faith. It should be the result of your faith. Your result of where you place your trust. And that's what's missing here.

Starting point is 00:30:24 And so the two of you working on your relationship and coming into agreement about what heaven looks like and what the truth of the scriptures are is a thousand times more important than whether or not you give a tithe for this four-month period of time while we're discussing this. I don't predict good things for your marriage until you get aligned on religion. It's the number one, one of the top four things that breaks families up. Hey, what's up, guys? It's Jade. Back to school season is here. And that means you've already got enough on your plate between dropping the kids off at school to taking them to practice. Or maybe you've got a kid driving off to college. Either way, you rely on your vehicles to keep life moving.

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Starting point is 00:32:48 doing a will is an act of love. If you're ready to create one, go to mama bearlegal.com. If you're not sure where to start, text quiz to 33, 789. And we'll help you figure it out. Caleb is in Raleigh, North Carolina. Hi, Caleb. How are you? Hey, Dave, I am doing well.

Starting point is 00:33:09 How have you been? Better than I deserve. What's up? Good. My question for you, so I'm weighing the benefits of either working towards paying our mortgage off early or putting the additional amount towards investing. And the reason I'm calling you is my financial advisor has told me it makes more sense to invest. But being a listener of your show, I've heard contradicting statements from you. So I want to talk through it.

Starting point is 00:33:34 Well, your financial advisor is wrong. And that's what the data says. Okay. The theory that he's using or she's using is that if you have money invested at 12 percent, or whatever the good mutual fund is bringing you. And you use that to pay off a 6% mortgage that you cost yourself money. That's the theory that they're operating under. What they're not taking into consideration is the socioeconomic impacts of paying off your home. What we find is people are healthier. Their marriages are stronger.

Starting point is 00:34:11 They do better in their careers. And in addition, and all of that amounts to way more. than the spread of a mortgage over a mutual fund. Way more mathematically. And where we see that turn up is when we studied doing the largest study of actual millionaires, not broke financial planners with an opinion, where we talked to actual millionaires, people that were millionaires, and we said, asked them a whole series of questions.

Starting point is 00:34:39 We talked to over 10,167 of them. And the number of them that didn't pay off their home and instead borrowed on their home effectively, it was what you're doing, to invest in a mutual fund and say, that's what caused me to build wealth. The number of them that said that out of 10,000 was precisely zero.

Starting point is 00:35:02 Okay. Instead, what we found was that the typical millionaire in America, the first one to five million, typically is about half, a third to a half of your net worth is a paid off mortgage. and the other two-thirds to a half is your 401k and your good retirement investing. But the idea of keeping a mortgage around to the typical millionaire, they laugh at that ridiculous advice, and so do I, and so does Jade.

Starting point is 00:35:35 There it is. There's the laugh. Okay. And I am 24 years old. So that's been the big question I'm weighing. Is it my age? Does that compound interest over time? pay off more than what pay in my mortgage off might be. Nope, because the risk, debt equals risk, and you haven't mathematically adjusted for risk,

Starting point is 00:35:55 taxes you haven't adjusted for, and, you know, nowhere in this equation have you figured out what it's costing a relationship or costing you physically or whatever else. See, we can trendline heart disease, anxiety increases in our culture over the last 50 years, and the trend line follows exactly over the top of increasing debt. As card debt, credit card debt, student loan debt and mortgage debt have increased steadily, so have those diseases. Interesting. Well, no kidding.

Starting point is 00:36:33 Of course you have more anxiety if you have a mortgage than if you don't. Hello. Right? And of course that affects your heart. You want to know what I think, and this is just something. I think it's not a fact. It's not data. I think that people just like the way it feels to invest their money. And I think they just like to see that balance go up, up, up, up, up. It feels better. It feels like money that they can see and feel in touch more than the equity in their home. Yep. I think it, honestly, I think it just boils down to a feeling. It might be even a subconscious thing that if you have, you know, a million dollars in a mutual fund, but you've got a half million dollars in a house mortgage.

Starting point is 00:37:14 Uh-huh. Okay. You can access. You can get it. You can't get it out of the house. Exactly. And I think it's a bus boat, you have to refinance. That's right. If it's in the house. I think that's, I mean. Which is another reason to do it because it keeps you from doing stupid crap with your money, right? So keep your hands off. It's what we call a forest savings plan. So Caleb, I would beg you to become debt free and stay debt free and use your most powerful wealth building tool, which is your income to build your wealth and get a different financial advisor, one who's. right. He's 24. He's got a long time to build wealth. Yeah, you got you got plenty of time. You're going to be very, very wealthy, but no. And age really doesn't enter into it because the math is still the same. As a matter of fact, age makes it more pronounced. So we had on the air yesterday, we had a debt free screen, Rachel and I did, 23 and 22 from northern Michigan. The house is worth about 300,000. Wow. They paid off 140,000 in 22 months. They have zero debt.

Starting point is 00:38:12 They make $170,000 a year. So let's juxtapose that young couple with this young man. Okay. And because he said, because I'm young, right? Can you possibly imagine what a couple making above $150,000 a year in their early 20s is going to be worth if they have zero debt payments? I'm going like $33, $34 million. Yeah. We didn't even put it in the calculator.

Starting point is 00:38:37 We just put the house payment only in the calculator and it was $20 million. I'm done. Wow. just the house payment. Wow. From 22 to 67, you know? And it's just like, holy. That is unbelievable.

Starting point is 00:38:51 You know, but what we're not doing there is paying, you know, worrying about what commission my financial planner gets. That's right. Which they don't get commission on paid off mortgages. That's a good point. Hmm. Things that make you go, hmm. That's a very good point.

Starting point is 00:39:06 Now, honestly, most of them don't give the advice because they're greedy jerks and want to get commission. That's really not what happens, truthfully. I'll defend them. Most of them just give this advice because they're trained by an industry that's wrong. I mean, the financial planning business is a bunch of lemmings. Do you all know what that is? Little rats that run in herds and they will all run off the cliff together. They follow each other like a herd, like the hogs when Jesus, when Jesus removed the spirit from them and the whole herd ran over the cliff, that's the financial planning business. Whatever one of them does, they all do. And then they declare it to be absolute by God.

Starting point is 00:39:42 truth, and it's most of the time not. Some of them are CFPs and some of them are certified financial Pharisees. And so, you know, so there's some really good people in that business, and there's some people who haven't had their own thought in years. They just were told what to think, and that's all they think. And then they decided that was truth like it came out of the Bible or something, which, by the way, none of this discussion comes out of the Bible, except the part where the borrower is slave to the lender. That part comes out of the Bible. But the rest of it doesn't. So, you know, I'm not defending paying off the home mortgage based on that other than you wouldn't be a slave anymore. That's nice.

Starting point is 00:40:16 But I didn't make that point to Caleb. I made a math point to him. But there you go. So, gosh, can you imagine? These 20-somethings get in here and they do these dead free screams and it's their stinking house. And the house was cute. I'm sure it was. Well, I mean, you thought, you know, but in northern Michigan you can buy a lot of house.

Starting point is 00:40:35 Yeah, you can. They're out in the middle of nothing. And so, but I mean, you get a good deal. I mean, but it was, it was a little, looked like a little Norman Rockwell painting and the little Norman Rockwell couple. I mean, they were just a power couple. It was unbelievable. Good for them. Yeah. And you're thinking, man, I think we're going to be okay. It's still possible. We got a few of those around. We're going to be all right. So this stuff works. And to Caleb's point, it works even better when you start young. Absolutely. I mean, it sounds like they probably didn't have a ton of consumer debt to pay off. They just went hog on their, on their mortgage. Yeah, on their mortgage. He was raised in a financial piece baby. I wondered, yeah. He was raised in that, and then he was dating a girl who was smarter than him.

Starting point is 00:41:14 And so that's what he said. But it's still a ton of debt. You know, if it's $140,000 towards the mortgage, that same, I mean, $140,000 is $140,000. If it's consumer debt, if it's why it doesn't matter, the fact that you can get intense and really pay something off in a short period of time is. Yeah, but knowing what I know, the amount of data that is in my soul on this stuff from sitting in this chair for 35 years. I hear that couple, and my mind, the math just explodes in my mind,

Starting point is 00:41:44 what's going to happen to that couple. And their family tree. And I can't, I don't have any data to back up, the hard data to back up, the health effects and the relational effects. What percentage of people never get divorced that don't have debt versus the people that have debt? Wow, that's interesting. Because divorce is grand, I mean, marriage is grand, but divorce is 50 grand.

Starting point is 00:42:05 So, I mean, if you split your assets ever so often to start over, it's hard to build wealth. Let me tell you what I get asked all the time. When should I get term life insurance? How much do I need? Is it affordable? Those are the right questions to be asking. So let's take a quick review. The fact is, term life isn't a baby step.

Starting point is 00:42:35 So if anyone is dependent on your income, you need to have 10 to 12 times your income in life insurance. Now, and most people are surprised by how affordable term life. really is. Even if you're not in perfect health. Look, I understand the hesitation since most insurance companies make it more of a hassle than it needs to be. Not at Xander insurance. They're not an insurance company. They're a broker that works for you. That means they'll shop and compare the top term life companies to find the most competitive options on the coverage for your family. For almost 30 years, I've recommended Xander for straight answers, competitive rates, and coverage that actually protects your family.

Starting point is 00:43:17 Call 800-356-4282, or go to zander.com for a quick and easy quote. That's zander.com. Welcome back to the Ramsey show in the Fairwinds Credit Union Studio. Jade Warshall is my co-host today. I'm Dave Ramsey. Sal is in New York City. Hi, Sal. How are you?

Starting point is 00:43:46 Hi, Dave. Hi, Jade. How are you guys? Better than we deserve. What's up? Good. Well, I'd like to start. start off by thanking you because I am the light at the end of the tunnel finishing up maybe step two. I'm almost completely out of debt. I plan on being there probably by the

Starting point is 00:44:03 end of the year. Cool. Good for you. Yeah. But part of really the reason why I'm calling is because as much as I'm invested into the Ramsey plan and being in control of my finances, my ex-wife is not, and her behaviors towards money concern me when it comes to our daughter. In what way? Is your daughter going to be hungry? Well, no, but a lot of, a lot of frivolous spending, the idea of it costs, what it costs, things like that, you know, racking up debt, a lot of debt, take borrowing against 401Ks, clearing out 401Ks. How old is your daughter? She's 13.

Starting point is 00:44:57 Okay. Good. All right. Well, here's the thing. You cannot, I mean, you could ask the same question and say, how do I teach my child to do their homework and get good grades if my ex-wife won't? how do I teach my child to have good manners and be a pleasant kind of person if my ex-wife I'm sorry I said those are also things that kind of yeah they go with the territory that's

Starting point is 00:45:27 so well what the answer the question is is you can't control what happens over there that's why we call them the X so we don't get to control that anymore the only thing you can control is what you can control and it's as for me in my house this is what we do. So here's what I do, honey. You're 13. And when I had 13-year-olds, the thing I always heard is, I just want to be treated like an adult. You ever heard that?

Starting point is 00:46:01 Yes. Yeah. To which my answer always was, when you're acting like an adult, I will treat you like an adult. When you're acting like you're four, I will treat you like your four. and within every 13-year-old's body is a 4-year-old and a 34-year-old. And so I have to ask this, multiple personality human, which one I'm speaking to at the time. Okay? If I'm speaking to the adult version of you, I'm going to talk to you like I would my best friend and say, honey, here's what I'm doing and why that makes sense.

Starting point is 00:46:33 I'm going to always be generous. I'm going to always live on a plan. I'm going to always be living on less than I make. I'm going to always be investing. I'm going to avoid debt and I'm going to enjoy some of my money that I pay cash for things only. I do not take on debt. You will not find chaos and anxiety at our house over here because that's the way I live and that's how I would love for you to live because I think it's going to cause you to be the best person ever.

Starting point is 00:47:00 If you're four, I'm just going to tell you no. And I don't have to explain it because you're freaking four. And just too, there's part of this that's going to have a, a delayed effect because at 13, she's not going to necessarily see how things end up, but there's going to be a day where she's 23, and she's going to think back and go, oh, gosh, my dad, you know, these are the things he taught. And I can see the results of that and how he's living today and what his demeanor is, how our relationship is. And then she's also going to see the results of what your ex is doing, which is she probably is going to end up with more debt. There's going to be more stress, more strain

Starting point is 00:47:38 on the relationship. So let it take its course. Let the, let the, learning and what she's learning take its course you're not going to see the result of it today or even next year or you know so honestly if i can i'll ask them am i speaking to the adult version of you if i am then let's talk this through and i will use persuasion and my tone of voice and use logic and explanation and data and spiritual guidance and those kinds of things like i would with an adult but if I'm talking with a four-year-old as having a hissy fit on the cereal aisle, then the answer is just no. And I'm not negotiating with a rational human being at this point.

Starting point is 00:48:21 I just have to pick them up and leave the store. Right. Yeah, I recognize with this, it, you know, Jade, like you said, it's the long game. Yeah, it is. It is. And the persuasion, when you say it to a 13-year-old about anything, you know, premarital sex, sex, studying, brushing your teeth, how to talk to pet boys, where to put your, what position to put yourself in, all these kinds.

Starting point is 00:48:48 The 13-year-old is going to listen some, and some they're not going to listen, and then you're going to get some hard lessons that'll come with that. And so, but the only thing you can control, I wouldn't put an ounce of my brain calories on what happens over at the X's. And if she brings that up, you just go, you know, I, you're. Your mom's a great lady, and she can do whatever she wants to do over there. And what we do over here is this. I don't know.

Starting point is 00:49:15 I usually, I'm sorry, Dave. That's okay. Go ahead. You're fine. No, I was just going to say, you know, I try to, you know, keep, you know, emotionally or any kind of thought or feeling towards whatever's going on over there. You know, not my monkeys, not my circus kind of a thing. And that's typically what I do. with that stuff.

Starting point is 00:49:40 It's just where certain instances come up, something like, you know, that happened today where it's like it hits in my brain where it's, you know, what is my daughter really learning, you know, from that influence and I don't want. Bad things. It's what she's learning. Right. You know, things that are not going to be helpful to her.

Starting point is 00:49:59 That's what she's learning. And the only thing, the only chance you've got to offset that is by pouring good clean water into the glass so that if it, displaces the other stuff out of the glass. Yeah. And that vessel being one precious 13-year-old.

Starting point is 00:50:15 And Rachel says what Jade said is more is caught than taught. I'll send you a copy of the book Rachel and I did together. It was her first number one. It's called Smart Money, Smart Kids, How to Teach Kids, How to Handle Money. It's a parenting manual on that. And it'll help you. You'll love reading it and it'll help you. You want to teach them to work.

Starting point is 00:50:33 You want to teach them to save. You want to teach them to give. You want to teach them to spend wisely. and you want to teach them to give, save, spend, and work. That's it. Yeah. Give save, spend, work. Give save, spend work.

Starting point is 00:50:43 And that's what adults should learn, by the way. Most people can't do all five of those things either. Give, save, spend work. Give, save work. Work. Give, spend. Save. I mean, that's it.

Starting point is 00:50:54 That's it. That's over and over, right? Yeah. Yep, that's right. Get stuck in that. Yeah. I mean, the other thing. It's a good question, by the way.

Starting point is 00:51:02 It's a good question. And then, you know, I don't have. Kids 13, but I've been 13, and so I feel like that's my perspective on this. And at the end of the day, when you become an adult, you learn just as much from what your parents taught so much of what to do and from the mistakes that they made. You learn from both of them. So it's not, oh my gosh, everything I taught my kid wasn't exactly right. They're going to learn either way. They're going to learn from the mistakes.

Starting point is 00:51:28 We were talking about that. You and I the other day on giving at church. Yes. In the old days, you would put a check into the kids. the giving and the offering plate and the child would see the parent doing that week after week after week on their day of worship and every single and and you don't have to say a thing. No, it's just drilled in. And, you know, but yeah, the more is caught than taught.

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Starting point is 00:52:48 CHM programs start at just $115 a month. And here's why that matters. If you are paying more than you need to for health care, that money could be going toward paying off debt, building your emergency fund, or reaching your next financial fund. goal. And your monthly cost isn't based on your medical history or where you live. Y'all, a lot of families find CHM gives them more room in the budget. That's why so many members say they're better with CHM. And right now, new members can receive a 50% credit towards their first month of membership. Go to CHMistries.org slash budget and use promo code Ramsey. That's

Starting point is 00:53:26 CHMistries.org slash budget and promo code Ramsey. Our question of the day is brought to you by Y. Refi missed private student loan payments can leave you feeling like your financial goals are stuck on hold because they are. Why Refi helps borrowers explore low fixed rate refinancing options that fit your budget so you can move forward, not be stuck. Visit whyrefi.com slash Ramsey might not be in all states. All righty. Today's question comes from Sam in Wyoming. He says, my girlfriend believes I'm making the worst decision. of our life. A family friend asked us if we wanted to buy their home without putting it on the market. It's a great deal. And an attorney will handle the contract. But we're not married and I believe we have too much debt at this time. I have about 50,000 of debt and earn 85,000 a year. My girlfriend

Starting point is 00:54:32 has around $100,000 in debt and makes $65,000 a year. We are currently renting and living with my brother. Am I making the right decision not to purchase this house? Yes. Now is not the time. You highlighted a reason not to buy this house, but there are several reasons not for the love of God to not buy this house. Your girlfriend is very emotional. She has something in her mind. She's created this picture, this playing house picture with you of you moving into this house that you can't afford and living this lifestyle with your friends that you can't afford. And you have just woken her up from what she thought was a dream, but you know is a nightmare. And so here's a thing. Number one, you're not married. Never buy a house with someone you're not married to under

Starting point is 00:55:23 any circumstances. Period. Period. This ends up in what's known as a car wreck. Terrible. Number two, and you highlighted this, the debt, $150,000 of debt between the two of you. No money saved because you didn't mention it, and I feel like you would have mentioned it if you had it, and you're living with a brother. So you don't even have a place of your own. There is no foundation, there is no financial security in this relationship at this point. And for those reasons, I'm out. So what I would do if I were in your shoes, and this would be the order of importance that I would do this. Today, since you're the one who wrote in and you're familiar with our principles, if I were you, I would start tackling your debt. I would start working our plan, the seven baby steps,

Starting point is 00:56:06 and I would start sharing that information with your girlfriend so that she can do the same. And then when the time comes and you guys, if you do decide to get married, I don't know if that's in the cards, if you decide to get married, and you still have a little bit of debt, now you can work together and combine your money as married people and actually pay off your debt, save up some money and then save up a down payment. And then when the time comes, you can purchase a home the right way. But that day is not today and it's quite far in the future. The problem with real estate is everyone says to buy real estate. It's a great deal.

Starting point is 00:56:42 Almost no one says don't buy real estate. You ought to buy a house, buy house, buy house, buy house. And a young couple, buy a house, buy house, buy house. Get out of my house and go buy house, buy house, right? That's what the brother's saying. Yeah. And it's a family friend. I'm going to give you a deal.

Starting point is 00:56:56 Buy a house. What's wrong with you? You're crazy. You got to buy a house. You got to buy a house. You got to buy house. It's almost as if you're a renter, you're going to hell. You're not.

Starting point is 00:57:06 Real estate has no middle ground. It is either purchased properly when you are in a proper situation to buy it and it becomes a blessing. Right. Or you're going to screw yourself over and it's going to take you a decade to get out from one of this bad idea called a real estate purchase. Well, you left a part out because the number one thing is everybody's saying buying a house. But the number two part is when you see a house, you think that's the only one. one. Yeah. You think it's the only deal you'll ever get.

Starting point is 00:57:39 The only one with that floor plan, the only one with that, whatever. And as a person who's been in the real estate business off and on most of my life, I laugh at that. There's a stinking house on every corner. Oh, but it's a great deal. There's a deal on every other corner. But look at the yard. Yeah, well, it's got grass.

Starting point is 00:57:57 You're killing me here. I'm sorry. It's a stupid house. Don't ruin your life. Real estate is a horrible. purchase when you're not ready. And you're not ready because you're not married. And you don't have any money.

Starting point is 00:58:14 And you're not married because you're broken and dead. Now, if you want to buy a house as a single person without your girlfriend, that's okay. But do not buy a house with your girlfriend or boyfriend. Stupid. All kinds of really bad things are going to happen when you do this. So, Sam, you are right. please stand your ground and if it means that this young lady runs away, well, that might not be a big loss. It may not be. And I just, I mean, I can't stress enough to have $100,000 of debt or

Starting point is 00:58:47 whatever consumer debt and to rush into buying a house, putting as minimal down as possible, having a payment that's way too much. Yes. You don't get hammered. Please don't do this. You're right, Sam. We're on your team. Timothy is in Los Angeles. Hi, Timothy. what's up. Hey, Dave. Hey, Jay, how are you guys doing today? Better than I deserve. How can we help?

Starting point is 00:59:12 So, just to be used to think, I'm calling me because my parents probably wouldn't. I am 19 years old, and my parents make well over six figures every year, but we kind of find ourselves living more or less paycheck to paycheck. And I'm going off to college in a month, and that brings one big payment at the end of September with it. And so I'm kind of calling just to ask, like, how do I get my parents on board with a total money makeover and get their, like, hearts into it? You don't. Just for, the number of parents that listen to a 19-year-old is almost zero. Now, are you concerned that when it's time to pay tuition in September, there's not going to be any money there? Or how are we

Starting point is 00:59:56 paying for your tuition? Yeah, so basically my dad's philosophy on it, just because the income is pretty high has always been that we didn't need to put anything into any accounts, um, because we would just pay for it when we got there. Um, but as the date gets closer and more logistics get figured out, it's kind of becoming clear that they're becoming stressed about it and I'm kind of becoming stressed about it. And so I know that it will be fine, but it's also just kind of like a thing where I've been, you know, listening for a long time and I've, I picked up those own money makeover book recently. And it's like all of this truth and like good stuff is here in front of me. and I kind of want to, you know, bring helping them the piece that I see in all these stories and all of that.

Starting point is 01:00:38 Well, I'm glad that you picked up the book. And that, I mean, that's going to serve you very well in your life. But I agree with Dave. You're not going to be able to change them because you told them that you listened to something on the radio or, hey, look at this book. But I am concerned with you for the tuition. How much, what you said they were just thinking that they're going to cash flow it. How much is due in September? just about $14,000.

Starting point is 01:01:04 $14,000. So the conversation I'd be having, and I think this is fair, this is not you overstepping. I think it's fair to say, hey, mom, dad, tuition's due coming up here and, you know, less than a month. I just want to make sure the plan is still what we talked about, that I'm still going to be able to sign up. Because if I'm not, I want you to tell me so I can start thinking about what my options are. And so I can start thinking about if I have to push to next September, if I have to start thinking about maybe picking up a job to help pay for, to help pay for this. I just want to know, I want to open up the lines of communication. That's good. That's good. But Timothy, overall, your heart is good to want your mom and

Starting point is 01:01:43 dad to learn something that you have learned and you're excited about. But truthfully, sir, it's what we call the powdered butt syndrome. Once someone has powdered your butt, they don't want your advice on money or sex. And so you're never going to be able to advise them on either one of those things, even if you're a 40-year-old financial planner and your father is broke. Maybe then, maybe then he will ask you a question, but he's certainly not going to ask a college freshman who's just out of high school because he read one book, and he's not going to listen to you. And I don't mean that disparagingly towards you.

Starting point is 01:02:16 It's just the way things are. And so it's the most difficult thing you can do. Now, what you can do is you can just say, mom and dad. I read this book and I loved it. I think you might like it and just leave it on the coffee table. And then see if they pick it up. Maybe I can get to them. Right.

Starting point is 01:02:37 Now, I do want to say this to you. I know you're probably moved off the line, but what I don't, what is an absolute no-no is if they start talking about student loans that you can both sign for, the answer is no. Correct. No student loans for you. We're not doing any student loans. You're not signing your name with. I'm not signing up for any debt.

Starting point is 01:02:56 We're going to find another way to go to college. You can't do it, Mom and Dad. You're right. Good catch. Good catch there. Hey, George Camel here. Listen, if you're behind on debt payments and drowning in debt, I already know what you're thinking. I can't afford a lawyer to help. And honestly, that's exactly what creditors are counting on. But here's what most people don't know. Guardian Litigation Group doesn't work like a traditional law firm. There's no massive retainer. There's no hourly billing that costs more than the debt itself. Guardian is a law firm built specifically for people in default behind on payments or staring down bankruptcy. And their model is designed so people in that situation can actually access real

Starting point is 01:04:05 legal protection. From day one, you're assigned an attorney. If a creditor sues you, you have someone who can actually represent you, not a call center that isn't built to defend you when things escalate. The best path out of debt is still doing it the right way. Budgeting, working the plan, changing the behavior. But if you've already hit a wall and you need real help, Guardian delivers. Their attorneys have settled over $600 million in debt for more than $55,000 people. So go check it for yourself, guardianlit.com slash Ramsey. That's guardian-l-it.com slash Ramsey. Attorney advertising, results may vary and no specific outcomes guaranteed. Michelle is in Sacramento. Hi, Michelle. How are you? Hi, Dave. Thanks so much for taking my call. Sure. What's up?

Starting point is 01:05:04 So my husband and I are just getting started here, and we're kind of at a crossroads. And we just started a family, so there's nothing like a baby that gets you thinking a little more critically about the future. Amen. And what a wonderful. Yeah. Yeah, it's amazing. It's the best. So basically, we have $100,000 between unit loans and auto loans. We have about a million in stock. He makes $145K. I make $175K. And I would love to be a stay-at-home mom one day. So I can have more, a bigger family. And I just don't know how that looks like. And how we could get a million in stocks? Lucky, I guess. No mutual funds in the mix? No.

Starting point is 01:05:55 Lucky, I mean, it just dropped in your mailbox. What do you mean? You all invested, or you bought stock or what? It was awarded through work. It's all one stock? Yes. Oh. Okay.

Starting point is 01:06:09 Yeah. Very, very scary. Yes. Very, very dangerous. Are these restricted shares? Are you able to sell them? I'm able to share them. Good, good.

Starting point is 01:06:22 Okay. Well, first order of business, if I woke up in your shoes, I would be terrified. Amen. Okay. I'm a little stressed out. I don't know what the best... I'd be terrified that all my money was on one horse, and he might fall and break his leg. Yeah.

Starting point is 01:06:38 Okay, so the first thing I'm going to do is learn a word called diversification, which means to spread around. So I'm going to cash out this stock, and I'm going to pay set upside the money for taxes that are created, see a tax professional and see how much it is, and then I'm going to pay off all of my debt, and then I'm going to invest the stock in good growth stock mutual funds. Now, what did your husband, this all was given to him as compensation? Yes. So he didn't pay anything for any of this? Um, there's some ISOs that were paid for, uh, before, yeah, but, the large sum is just awarded. So you're going to have a lot of taxes if you do what I'm talking about, but I'm going to do it anyway, because I'm afraid you guys are going to get baked if this company slips just a little

Starting point is 01:07:28 and stubs its toe. It's going to cost you 200 grand that you don't have. So I'm going to get out of this business of owning one stock. Your husband's not going to like this conversation. I don't care. he's wrong. Okay? Because he thinks he knows what his business is going to do, and he doesn't. He's not in control unless he's the owner of the business. And even then, he's not in complete control, because sometimes the marketplace will still kick you in the teeth. And so, anyway, all that to say, I'm getting out of this.

Starting point is 01:07:55 And let's pretend that we spend $250,000 on taxes and we pay off $100,000, $140,000 in debt. So we're 100% debt-free. I'm sorry? $550. Sorry, we also have a home loan. and that's $550,000. Oh. Sorry, you should have brought that up.

Starting point is 01:08:13 That's okay. All right. Okay. I don't think I'm going to win this discussion, but I'm going to tell you, you call NASS, so I'm to tell you what I would do. I would cash out the stock. I would pay my taxes and I'd pay off all my debt. I don't think you're going to have anything left.

Starting point is 01:08:36 Yeah, exactly. So that's what I'm scared about. And if you don't have a house payment and you don't have any debt and you never borrow money again because you live on a budget, you probably can make it on his 145. Plus, I bet he's continuing to get stock, is he not? Yes. Does he have just a normal, I mean, does he have the ability to invest through a 401k into, you know, mutual funds or into funds?

Starting point is 01:09:00 Yes. Okay. Okay. I would set my 401k up, but as he, how much stock does he get a year in value? How much money in stock does he get once a year? About 50,000. Okay. So he actually makes one.

Starting point is 01:09:12 195. That's what I would do. Okay. I would cash that stock out, and I would invest in the 401k heavily every year. Okay. And live off of 195 in Sacramento with zero mortgage and zero debt of any kind. You can do that. Okay.

Starting point is 01:09:32 And then, okay, that sounds good. But it's not, this is not an easy sale. It seems like a lot of, it seems like a lot of money. And I just want to set up our teachers so that, you know, we can give more to church, give to our parents as possible, set up our kids. Well, if you're making $200,000 a year and, you know, you're what, 28 years old, how old are you? 28. Oh, look at that. Almost like I've done this.

Starting point is 01:09:57 Okay. And so, yeah, so, yeah, you're 28 years old and you make $200,000 a year and you don't even have a mortgage. I think you can invest and you can be generous. And I think you can build a wonderful life and become multimillionaires. and that's the way I'm looking at this. I think you own way too much of one company. It's very, very, very dangerous. Yeah.

Starting point is 01:10:19 Does he at least share your fear in that? Nope. Actually, we're both probably overly confident. In that company, because that company has always done well. But that's what we call the myth of continuity. There's one thing is for sure. Things are going to change. They're going to get worse or they're going to get better.

Starting point is 01:10:40 This idea that things are going to remain the same is mythology. Okay. And so I don't know. I do know the first time I ever ran into this was about 35 years ago. I used to do one-on-one personal counseling in those days. And I sat down with a lady who had a million two with a name brand company that if I named it, every one of you would know the name of the company. And she had a million two in company stock and she was 78 years old.

Starting point is 01:11:05 Whoa. At least she had a million two before she came and saw me because, in the six months before she came and saw me, she lost 30% of it because that company had a bump. And so she didn't. She really had about $780,000 by the time she got to me. And she sat in my office and cried. I bet she did. And I'm 78 years old.

Starting point is 01:11:26 What am I going to do? And I'm like, well, we're not going to stay in this position. We're going to get out. And you mean I got to pay all those taxes? That was painful too. What about my company that I've trusted all these years? And I'm like, you trusted not only for your income, you trusted them for your retirement. You can't trust them for both.

Starting point is 01:11:42 That's bad. You should have retirement on your own and trust them only for your income. So, no, I would not be keeping any of this company stock. I don't own any single stocks, Michelle, by the way. Not one. No one. No one. Hope that helps.

Starting point is 01:11:57 That's tough. Wow, old sir. Mike's in Houston, Texas. Hey, Mike, what's up? Hey, Dave and Jade. Long time listener, first time call. I love you guys. You too.

Starting point is 01:12:08 How can we help? Yeah. my wife and I've been debt-free since 2020. We're in Babyset 4, 5, 6, cruising along. My question is, how we set boundaries with my mother-in-law about child care and cost. So we've paid her since my daughter, she was born in, like, 2014 to take care of her, and then during the summers, and then my son was born in 2020, and she's kind of done the same thing for all these years. So we end up paying her now about $800 a month, which I know is a bargain, but I feel like that's taken away from a lot of our saving power now. What would you do if she wasn't caring for them? I know.

Starting point is 01:12:52 We would do all these things on our own. So now the kids are in school. Okay, so you don't need child care now. You're doing it as a favor to her? No. Yeah. So it's kind of this, she hasn't worked for so long and doesn't really have a plan to go back and so now we just need help with like well i you know how old is your oldest one uh she is 12

Starting point is 01:13:15 okay so um well this is one of those things that because you didn't deal with it when you should have it's going to be harder to deal with it now yeah you've made a bigger problem by not dealing with it when it was a little problem so now i i don't know how this is going to go but um ma i'm going to sit down and no kid around. You and your wife sit down at the kitchen table and just say, mom, we're thinking about changing the direction of the child care. We don't really need child care. How can we help you make a transition?

Starting point is 01:13:49 What's a reasonable plan? Yeah, I think that's fair. I don't think that's you being the villain at all. The kids were going to grow up and outgrow the need of that. I mean, what are you going to do in six years anyway when the 12 year old is 18? Absolutely. So we need a plan. And it's been wonderful.

Starting point is 01:14:06 It's been a great season. and it's been a blessing to you the money has and you've been a blessing to us and to the kids. So we want to make sure we do a gradual transition that doesn't harm you, but we need to work on a transition. What do you want to do and how can we help you? That's okay.

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Starting point is 01:15:43 And right now, you can try NetSuite Next for free. If your revenue is at least seven figures, go to netsuite.aI slash Ramsey. That's netsuite.aI slash Ramsey. If you're working the baby steps, the best and fastest way to do it is by using every dollar. It's more than just our budgeting app. Now, the whole Ramsey plan is built right in. You track your progress, you get personalized recommendations and coaching for your situation. It'll sound just like you were here on the air with us.

Starting point is 01:16:31 It'll help you free up more money, work the plan faster, get out of debt, become wealthy. It's like having one of us walking with you every single day. Start every dollar for free by downloading it in the app store. or Google Play. Crystal is with us in St. Louis. Hi, Crystal. How are you? Hi, Dave and Jade.

Starting point is 01:16:49 Thank you guys for taking my call. I appreciate it. Sure. What's up? So I have a little bit of a dilemma. I think I know what you're going to say, but I want to hear it, I guess. Okay. So we're building a house right now, and I'm afraid that we're going to be house poor.

Starting point is 01:17:07 So a little bit of back story is we're debt-free. I'm 29. My husband is 33. The only thing we owe on now is our house that we're building. And it's just kind of snowballed. We didn't put enough money in things like we forgot about some stuff like the septic, expensive things. So we have 40 acres that's paid for. And then we built a big shop.

Starting point is 01:17:29 We're living in the shop now while we finish the house. So all in, when we're finished, we'll have about $700,000 in this place. We have quite a bit of equity in it. We could probably sell for like 1.2 in our area and how the market is right now, which is exciting that we have that much equity. But my husband is the only one working right now. We have two kids, and there's just no child care where we're at under two. So we have a 10-month-old, so I'm staying home with him. I do plan on going back to work, and I'll make about $35,000 a year.

Starting point is 01:18:03 He makes about $120,000 right now. So our house payment is a big chunk of our income right now, which we're still making it fine. My husband does side jobs excavation work and flipping vehicles on marketplace, but I just hate having to rely on that to come up with the payment. What does he bring in every month? What is your monthly income, including all of his side hustles? If he does the side jobs, it's probably about $8,000 a month. If he doesn't do the side job, probably six. And how much is the amount?

Starting point is 01:18:38 Your house payment is what? Whenever it's done, it'll be about $4,000. So it's half of when he's going. Or 75% or 70% if he's not doing sidehouses. Correct, yeah. And so I know that 25% is what we need to shoot for in a 15-year mortgage. My question is, should we finish building? we're probably about two months done, two months and we'll be done building.

Starting point is 01:19:07 Should we finish building and just turn around and sell pocket like $600,000 and find somewhere and pay cash, which sounds great? Or stay in the school district we want and just, I go back to work in a year and he just pick up even more side jobs and just really work on, you know, hounding down this debt to be able to stay where we want and the area that we want. The hard part for me with that strategy that with option number, too is even if you went back to work, you were bringing around $2,000 a month in. So that gets you back to the $8,000, which now you're at 50%. But that means in perpetuity, he would have to be doing all of these side hustles forever and ever, amen. Until your incomes come up. Yeah. Right. You're going to, I'm sorry, Crystal, this is a horrible thing. It is. It's this house. You love this house. It's got your heart and soul in it. I can

Starting point is 01:20:01 hear it in the way you're describing it. It's got a piece of ground. It's got a piece of ground, there's a piece of dirt there that goes with it. Oh my gosh, this is just wonderful. Everything is good, except your finances. You're going to be broke. And you'll end up disliking the house and disliking the property because of what it's costing you, not just in dollars and cents. You, you're not going to be able to do anything and everything that happens when things happen are going to end up looking like new debt. You don't have the margin to save up, You don't have a margin to save up for the next car. You don't have the margin to save it for the kids' college.

Starting point is 01:20:36 You don't have the margin to save for your investing, for your future. You're just broke people living in a big house. Yeah. I should say that we have about 60,000 also in the bank. I've got about 30,000 in my retirement, and the older kid has about 7,000. Yeah, that's before you took out a mortgage that was 70% of your take home. Right. And I mean, I love that you told us that.

Starting point is 01:21:02 what does that mean to you? That doesn't change the situation that this is 50, in some cases, 75% of your take-home pay. Yeah, I guess it doesn't change it. You're right. It just makes me feel like a little more comfortable having that little bit. If I'm short, $1,000, I can take it out of that. Right. But what day when that's gone, what are you going to do? Because you're going backward the whole time. What Dave highlighted is the thing I want you to be thinking about, which is it's going to cost money to do the things that are going to be required out of your life. Safe for kids college.

Starting point is 01:21:35 Help your kids, you know, buy their first car. Take a family vacation. Those things require margin to save up sinking funds for or to invest for. You don't have any margin. And you need to keep the emergency fund. You don't want to, you know, drain that down and dwindle that down and before you. This is not an emergency. This is a you refusing to face reality.

Starting point is 01:21:57 So if I'm in your shoes, what I'm going to do is sit down. and have a serious discussion about our incomes. And not in two years when I go back to work. I've got to go back to work now. And we both got to get our income up. And if we can't do that, then what we're saying is we're not willing to trade those hours of work and those changes in work for this house.

Starting point is 01:22:24 Because this house is not a blessing right now. It's a curse. I know it feels like a blessing when you walk out in the yard and you're looking at it and you smile. But then when you turn back in and you go to the kitchen table and the checkbook's laying there, that's when you know it's a curse. Yeah. And so it's, when you're strapped to something like this, it does not bring joy.

Starting point is 01:22:48 And so I want peace for you guys. I want joy for you. I want prosperity for you. And the numbers you're giving me make me ache for you instead. So if I were in your shoes, I'm going to work on this for a little while. But after the first of the year, when the grass starts getting green early in the spring, I'm putting this thing on the market if we haven't changed our career tracks substantially by then. I wonder if there's any way, 40 acres is a decent amount.

Starting point is 01:23:15 I wonder if there's any way if they sold off some of those end pieces and took that cash. I might parcel it off and sell off a couple five acre tracks or 10 acre tracks and dump that onto the mortgage, get the balance down and take some of your 60,000. You've got too much sitting there, throw 30 of that in the. there and see if you can't get this balance down to where you can swing it. That's not a bad idea at all, Jade. It kind of destroys part of the dream, but the dream's turned into a nightmare from where I'm sitting. Yeah. And that's, uh, whew, this is rough. So, um, it was an old book out years ago that, uh, Dr. Stephen Covey put out and it was made famous because it was kind of like

Starting point is 01:23:55 the total money makeover. It stayed on the bestseller list for like a decade. There are several books that have done that. Men are from Mars, women are from Venus. Do you remember that book? I've heard of it. It was on there for about eight years. Yeah. Same thing. Strange little book. But yeah, there's books that hung out on the bestseller list for years and years and years. Atomic Habits in most recent is a great book, a friend of ours wrote. And but the book was the seven habits of highly effective people. And, um, One of those habits was to begin with the end in mind. Crystal and her husband violated that rule.

Starting point is 01:24:41 They just started building. Whoopee! And then they discovered they needed a subject tank. And then they discovered they needed like waterline. And then we needed shingles for the roof. Didn't think of that. Yeah. And horrible, horrible planning.

Starting point is 01:24:58 It's kind of biblical, though, too. that scripture that says... Begin with the end in mind. Oh, yeah, yeah, yeah, yeah. About starting a tower and not counting the cost. And then they look at him and said, look at this guy. He started building a tower and he can't finish it. Right.

Starting point is 01:25:12 Jesus said, don't build a tower without first counting the cost lest you get halfway up and you're unable to finish. And all who see you begin to mock you and say, this man began to build and was unable to finish. Begin with the end in mind. And so this is a mistake that a lot of people might. Crystal's not a bad person, her husband's not a bad person. They just violated a basic concept of strategic thought and it will burn your butt. And it'll put you in a place where you have pain in the long term or at least in the short term. Selling this house on the short

Starting point is 01:25:45 term is going to be painful. Selling off some of that acreage is going to be painful. Keeping it's going to be very painful. If you or someone you love is dealing with a complex health issue, navigating the health care system can feel like a full-time job that you never signed up for. Several months ago, my family experienced multiple emergency health care situations, and little did we realize what kind of nightmare we were in for beyond the medical issues, dealing with different schedules and signatures from different providers, scheduling appointments, decoding all of the medical jargon, figuring out medical billing and the mountains of paperwork. All of this on top of being sick or scared and dealing with the children.

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Starting point is 01:27:21 slash ramsie or click the link in the description to see if you qualify it takes about two minutes that's s o l-a-cee solacehealth dot com slash ramsie must be 18 or older advocates do not provide medical or legal advice. Welcome back to the Ramsey Show in the Fair Winds Credit Union Studio. Scott is with us in Phoenix. Hey, Scott, how are you? I'm doing good. How are you doing, Dave?

Starting point is 01:27:58 Better than I deserve. What's up? Me too. Love that thing. Well, we're kind of in a predicament. We've got a data center that's going to be built within about 400 yards of our house in the neighborhood and and we're just wondering

Starting point is 01:28:15 what would Dave do? We've got, our primary home is paid for which is worth about probably around 600. We've got a house that we just inherited that is just closing, which is we're going to net probably about

Starting point is 01:28:32 4, 16 out of that. And then we've got a mountain house up in the woods that's worth about about right around 600 as well. So your primary residence was 400 yards from a commercial zoning? That's what they said.

Starting point is 01:28:53 It's commercial. And now they're putting an industrial million square foot data center on it. Yeah, but I mean, the point is they could have put a warehouse there anyway. Absolutely. So you're 400 yards from a minute. You're 400 yards and have always been 400 yards from an industrial slash commercial area. Yeah, it's been zoned commercial commerce. Yeah.

Starting point is 01:29:22 Okay. I'm both retired. What I'm trying to navigate is the actual facts of the impact of this versus the obvious emotions of it. Yeah. I want to know. Scott, what do you perceive the impact to be? Well, from some of the studies, it sounds like, you know, the noise, the total footprint of the environment is going to be a negative. And then some of that, the real estate people are saying the negative impact is going to be about 25% of reduced in, you know, housing around there.

Starting point is 01:30:02 Okay. Which is, you know, who knows what it's going to be. Yeah, you don't know because you got to sell it first. And so I do not know what is going to happen with that because I've never, we're experiencing this all over the country right now in different neighborhoods, so to speak, or different areas of town. And so we don't know how much of this is. So when you're facing something like this, there's always, there's a percentage of it that's

Starting point is 01:30:39 drama and there's a percentage of it that's actual facts. And the truth is the real estate agents are somewhat working on the drama side. They don't know. I mean, you know, we know what you've been told. You've been told it's going to be noisy. There's a detrimental effect on the entire environment in the area and all that kind of thing. And then maybe it's worse or maybe it's better when they actually build it. So the unknown is more scary.

Starting point is 01:31:13 than the actual known. So it might be a mistake. When's the thing coming out of the ground? Well, they're building it right now. They're putting the steel up now. Okay, good. That's good news. So in a year, we're going to know a lot more than we know right now, right?

Starting point is 01:31:36 Yeah, that's true. I mean, it could be quieter. It could. Let's pretend that the drama is night and the, and all the anger and everything is, which is, I'm not saying this, it's not valid. It's just there. But let's pretend that that's 50% and 50%'s reality. So it's not quite as noisy as everybody says.

Starting point is 01:32:01 It's not quite the negative impact as everybody says. And then we settle in and your house actually brings about what it's brought before all this was announced. The problem is if you sell your house now, someone buying it is buying, is. going to discount it based on the drama, not based on the reality. And we don't know. The reality could be worse. The reality could be better than the discussion. Does that make sense? Yeah. Yeah, it does. In my experience, these things are not usually as bad as whatever these things are. But, I mean, a negative impact to a piece of property is not nearly as bad as everybody thought it was going to be. So I had an experience.

Starting point is 01:32:46 We owned a piece of property and the HOA was all up in arms. They were putting a Walmart down the street, about four or five pieces of property away. It was a commercial piece of property. It was zoned for retail. Walmart didn't do anything wrong. They just put a Walmart where Walmart's go. And everybody's like, oh, God, the neighborhood's going to fail. It's going to lose 50%.

Starting point is 01:33:03 A year and a half later, the neighborhood was up. In other words, it had no effect. Wow. Except all the drama and the yelling and the screaming and the picketing and all. all the stuff around it. And if you had sold it to when the picketers are out there, you know, you'd have given your stinking house away for no reason because 18 months later, after all the everybody's pulse rate went down, there was net, net, net, no effect.

Starting point is 01:33:28 Now, I'm not saying that's the truth about a data center. I don't know. I'd be curious to know, especially if he lives in an area where there's other residences near him, if anybody else is selling, if, like, if you can kind of survey and see what's going on. That also could give you some information. I'm pretty sure you're going to sell your house too cheap if you sell it right now. If it's me and I own a bunch of real estate, I'm going to ride this out a little bit and let the waves calm down and see what the actual flood is.

Starting point is 01:34:01 See what the actual, you know, cause. Okay, hurricanes coming! You know, and like, yeah, and it rained. I would think you could do some, I would think you could do some fair research on areas. similar to yours, similar-sized data centers. I feel like you could look out there and see what's gone on so far. If there's a data center that's been up 18 months, and within 400 yards somewhere in a metro area, what did it do to property values? That's a good piece of research. I don't know that. There's enough of them going up that you might find that. But yeah,

Starting point is 01:34:37 my life experience tells me that the drama is always worse than the reality. Generally. And it's not always, but I mean, often enough that I'm going to probably sit there and ride this out unless I did research that told me otherwise. Uh-huh. Yep. And I got to believe it's still somewhat new, but I feel like there's something out there. There's got to be some numbers out there that'll give you at least a sense. But I'm pretty sure you're going to sell your house too cheap if you sell it right now. Yeah.

Starting point is 01:35:06 I could be wrong. I mean, I really am just discussing this with you out loud. I don't really have any data or. anything to back this up other than years of real estate and stuff like the Walmart example, those are real things. That really happened. But the number of times, I mean, but it's kind of like for me, it's, you know, the, you know, the hurricane is coming and then it rains.

Starting point is 01:35:34 And the wind blew for four hours. But we all acted like that the house was going to be completely blown over. and it was basically a rainstorm. Yeah, it may not affect you. Because it wasn't what everybody, but, you know, you kind of got to prepare for it emotionally, but didn't happen, you know, and so I don't know. Can't think of, I mean, anything else you can figure out where there was an environmental impact of a property close to a residential,

Starting point is 01:36:01 what did it actually do? Hey, guys, Dave Ramsey here. Every day on this show, we help people work through real money problems and figure out what to do next. Now, you can get that same kind of help any time with Ask Ramsey. Ask your money question and get answers built on Ramsey principles we use on the show. Whether you're making a decision or just want something explained, Ask Ramsey is here to help. It's fast, simple, and free to use.

Starting point is 01:37:01 Go to Ramsey Solutions.com and try Ask Ramsey today. That's Ramsey Solutions.com. Jane is in Charlotte. Hi, Jane. How are you? I'm doing fine, Dave. How are you? Better than I deserve.

Starting point is 01:37:31 What's up? My husband makes $210,000 a year. I make $75,000. He contributes 17% of his salary to our household account just because that's what he wants to give. And I've always given 100% of mine. But just recently, I said, you know what, I'm going to give 17% as well. But it ends up to where I have to give more to pay our bills.

Starting point is 01:38:00 But my question is, should I be giving 17% or should I be giving 8.5% because my salary is so much less than his. How old are you guys? 58. And how long have you been married? 40 years. Oh, boy. Okay. I want to say this as gently as I can.

Starting point is 01:38:24 this is tremendously dysfunctional. What kind of human being is married to a woman for 40 years and gives 17% towards the household? And what kind of human being accepts this arrangement? I'm at a loss because he puts his foot down and that's what he says is going to go. And I don't know another way to make it be different. Well, you're 40 years too late to raise as much hell as you should have raised, but I guess better late than never. Yeah. Well, it's only been this way for 23 years.

Starting point is 01:39:08 Okay. What changed? What started this? How about no more? We're not doing it this way anymore. My Bible says to leave and cleave. My Bible says that, and the two are one, and we are now one flesh. And if you want to continue to live in this house with me, buddy, it's now 100.

Starting point is 01:39:26 percent. Yeah, I'm hearing. Otherwise, I'm going to knock a noggin on your head. Yeah. Nut. This is nutty. Yeah. You've got, you've really got two choices here.

Starting point is 01:39:41 Jane, you can participate in the dysfunction by saying, oh, I'm only going to do, you know, 17%. Actually, I'm only going to do 8%. And you can participate in it. Or you can do what Dave said and draw a line and say, here's the way it needs to be. in order for me to continue. Yeah. But is the 8% fair? No.

Starting point is 01:40:05 Nothing in this discussion is fair. 100% of both of you is fair and correct and the right way to operate a household. Anything less and you're participating in the madness. But you're not going to do that, are you? You're not going to cause this big a stink. Because what I'm talking about is turning his. little world upside down. Which needs to happen, darling.

Starting point is 01:40:33 I've said those things before, but it doesn't work. Okay. I think you need to see a therapist and a marriage counselor's what I think. And have them help you decide what you're willing to do. If you want to live in the middle of crazy town, just build you a tent, kiddo, and just live there. You've been doing it for 40 years, or at least 23 or whatever it was. he decided this absurd but idea that he thinks he's a roommate instead of a husband.

Starting point is 01:41:08 But, um, uh, so Jane, for 40 years, Sharon Ramsey has not earned an income since our oldest daughter was born. So what if I told her I was going to put in 17%? Do you think that hillbilly woman would have put up with that? I'm just telling you, she wouldn't there have been frying pans involved and she's from East Tennessee. That's an Olympic event there. Yeah. This is tough. Yeah, honey, I'm sorry. I don't know have a fix other than to try to embold you and give you verbiage to sit down and talk to someone and get the help that you guys needed 23 years ago and you still need today.

Starting point is 01:41:52 Because what he is proposing and what he has put you under is what we call financial abuse. And you guys need help. Yeah. This is weird. It's not right. It's not normal. It's unethical. So how many ways do I need to say it?

Starting point is 01:42:12 And so I would not want my friend Jane to tolerate it. And I would not want my friend, her husband, to continue to be a bad husband. Oh, boy. Yeah, that's tough. You're going to have to, it's going to require a lot. Yeah. A lot. Yeah.

Starting point is 01:42:28 And these patterns are deeply ingrained at this point. Well, yeah, because she's asking us to give advice on how to be more dysfunction. Yeah, I can't gauge the level of crazy that I want to participate in. I just don't do crazy. Yeah. So there we go. And this is crazy, Jane. It's crazy, crazy, crazy, crazy, crazy, crazy, crazy.

Starting point is 01:42:53 Wow, I'm sorry, kiddo. I hope you guys can get some help for your marriage. You're desperately, desperately needed. All right, Hunter is in Phoenix. Hey, Hunter, what's up in your world? Hey, guys, how are we doing today? Better than I deserve. How can I help?

Starting point is 01:43:09 Hey, I just want some information or some help on how to tackle some debt. I'm a recent college graduate. Cool. What's your degree in? Construction management. Good. You get a new job? Yes, sir.

Starting point is 01:43:24 I started in June. Awesome. What are you making? I make $78. thousand dollars a year's salary. Good for you. Plus bonuses and stuff, huh? Yeah, we get a 401k bonus at the end of the year.

Starting point is 01:43:37 Awesomeness. All right, good for you. That's a great job coming out of school. Congratulations. Very nice. And how much debt have you got, Hunter? So I got out of school with only about $11,000 worth of student debt. Good.

Starting point is 01:43:51 And then I got about, this is what's going to hit, is $33,000 in a truck loan. Okay. Okay. And so you celebrated your graduation and your new job by going and doing a stupid thing. Exactly. You were 100% correct. You wouldn't be the first. No, this is like a standard. It's the number one mistake new college graduates make. They go buy a new car. Number one mistake. So yeah, you did it. And you did it good. You went big. Yeah, you did.

Starting point is 01:44:22 Okay. So you got third. Yeah, you got a home run. So you got 44 over the fence. $44,000 in. debt. If you keep the truck and you live on beans and rice and you have no life, you can be debt free in a year. If you don't want to trade the truck for beans and rice, you could get rid of the truck now and be debt free really quick and have a decent life. But you're not going out to eat. You're not going on a date other than to throw a frisbee. And you're not going on vacation. You're not doing nothing except cleaning up this dadgum mess you made right after you graduated. You did it really good till then. Did I hear you say, we may have cut you off.

Starting point is 01:44:58 Did you say you moved back in with your parents? Yeah, I chose to move back in after college, so I didn't have to pay rent and tried stacking up cash. Yeah, how much cash do you have? Right now, I got about $4,000 in a Roth IRA and about $3,000 high-yield savings. Okay, no more Roth, no more investing. Clean up a stay-in loan and get the truck paid off and move out. Go get your life. You make $78,000 a year.

Starting point is 01:45:26 You need to get a life. go get your one-bedroom apartment. I personally would sell the truck, but if you want to keep it and scratch and claw and be done with it in about a year, you can do it. And you need an extra job if you're going to do that. Let's just work all the time. Any chance you can get extra work with the construction folks, or is that it? Not with the company I work for currently because we're a full-time salary.

Starting point is 01:45:51 I can probably do some weekend piece work with other companies. Good. Yeah, I mean, that's the name of the game. If you want to keep the truck. So I'd go get a one-bedroom apartment, and I would decide whether I'm keeping the truck, and I'd work all the time until I'm 100% debt-free. And that has to be in under a year. And I'd get the one-bedroom apartment in the next 30 days.

Starting point is 01:46:10 Yeah, I would, yes. You do not get to say, I want this truck, therefore I get to stay in my parents' house to pay for it. No, no, no, no, no, no, no, no. Big no-no-no-no-no. No, no, no, no, no, no, no. I live with my mommy because of my truck. No, it's just something oxymoronic about that. It doesn't feel right. It doesn't sit right with me, Dave.

Starting point is 01:46:31 Hey, guys, George Camel here. Our big Investing Essentials event is just one week away. It only happens once a year, and trust me, you don't want to miss this. If you're tired of sorting through all the conflicting investing opinions online, then join Dave Ramsey and me for this two-night virtual event to learn Dave's playbook for investing and wealth planning. We're going to break down 401Ks, mutual funds, passing on wealth, and more. So join us next week, September 1st, and then. second. Tickets start at $199. Do not wait. Get yours today at ramsaysolutions.com slash events or

Starting point is 01:47:44 click the link in the show notes. Buying or selling a home is a huge decision and with so much conflicting market news out there about housing, it can be hard to know what's really going on. We're here to help you understand what the market's actually doing, not what all the drama is, so you can buy or sell with confidence. We recommend a 15-year fixed rate mortgage. Those rates are covering, hovering just below 6%, about 5.5% right now. And don't wait on a rate that you can't predict. You date the rate, you marry the house. You always refinance later if the rates come down.

Starting point is 01:48:35 Remember, no matter what the market's doing, only buy when you're ready, you're out of debt, you have your emergency fund. Median home prices dip below $429,000 last month, which is a 2.4% decrease from the previous year. Not exactly a bursting bubble, but certainly a stabilized market. Good news if you're ready to buy. One in five listings had a price cut last month, and there's 1.1 million homes on the market as we speak. So real estate's good. Everything's fine.

Starting point is 01:49:08 Breathe. Breathe. You can check all of this out at ramsysolutions.com slash market or click the link in the show notes. Josh is in Birmingham. Hey, Josh, what's up? Hey, Dave. How you doing? Better than I deserve. How can I help?

Starting point is 01:49:24 Yes, sir. So I'm 30 years old. I have an annuity. It matures in about two months, and I've spoken to a financial advisor and trying to figure out if I should use him or if I should just do what I have planned on my own. So I'm just thinking about trying to transition it to another annuity and then systematically trying to withdraw some of that money out over the next five years or so. to get it out. Why don't you just cash it out? Because I would owe... I thought you said it was up. You're not going to own much taxes on it. How much is in it?

Starting point is 01:50:02 $200,000. So it's about $950,000. I would owe taxes on about $200,000. I'm sorry. How much is the balance of the annuity? What's it worth? $950,000. Okay.

Starting point is 01:50:15 And what was it when you took it out? So when it would mature in a couple months, and then I would take it out. The balance would roughly be about $950,000. I know. What was it originally when it started? Originally, it was about $1.1 million. So there's a lot of fees and a lot of details on that. Okay, so you've lost money on the annuity?

Starting point is 01:50:43 I've lost... $200,000? No, so the post-heifer was about $760,000. And so, yeah, over time, I probably, yeah, I guess I've kind of. Okay, what I'm trying to determine is how much money did you put in it when you started it? 1.1? It was a work accident, and I used it to live on for about seven years or so. Okay, so that's what reduced the balance.

Starting point is 01:51:11 Yeah, yeah. I see. Okay, so it's 1.1 went in from an accident, and then you lived off of some of it. How much did you withdraw to live on? I was withdrawing probably around $50,000 a year. For how many years? Probably about seven years now. Okay, $350,000 from 1.1 puts us at, what, $700,000, right?

Starting point is 01:51:39 $650,000, no, $750,000. Okay. All right, so $750,000 is, and then it's worth $900. So you would have taxes on 150, correct? Yeah, roughly. It depends on what the market does, the time that it matures on that date. Yeah, yeah, I understand, I understand. But roughly, we're giving real numbers here.

Starting point is 01:52:02 Okay. Yes, sir. Yeah, so I would get out of this, and I would get into some good mutual funds with a good SmartVestor Pro. Go to Ramsey Solutions.com and click on SmartVestor Pro to find somebody in your area there at Birmingham that we recommend with the heart of a teacher. Let them sit down with you and crunch the numbers. I'm not going to do that here on the air.

Starting point is 01:52:20 Are you back able to work or you still have to draw off it? Oh, no, I've been working for about five years now. Okay. All right. So from this point forward, you could just let it grow and leave it alone and just become wealthy, correct? Yeah. Yeah, that's the idea, yes, sir. Okay.

Starting point is 01:52:37 So here's the problem with the annuity. Like you said, it's got a lot of fees, all right, that aren't necessary for your situation. You instead could buy mutual funds that don't have as many fees, half the fees. half the fees probably or so. And then you can pick good growth stock mutual funds that are growing. The market has averaged close to 12. If you only, and we're about 12 year to date this year, and it's only August. Okay.

Starting point is 01:53:05 But if you only make 10, your 750 would grow to, in seven years, it'll be 1.5. in seven more years, 14 years from today. How old are you? 30. 30. So when you're 44, you would have $3 million. Okay. And when you withdraw the money out of it, you will only have capital gains tax, not ordinary income, which is double capital gains.

Starting point is 01:53:41 And when you're in an annuity, the growth is at ordinary income. Yes, sir. as you're about to find out on that $150,000 worth of gain you've had, approximately. I'm trying to figure out what your basis is, but you need to get someone to actually crunch the numbers and go, this is actually what's going to occur. But the problem is when your $750 turns into $3 million, you're going to pay either a 35 or a 40% tax on that or a 15% tax on that. That's a huge difference.

Starting point is 01:54:11 And that's if it's in the exact same mutual funds inside the annuity as outside the annuity. Yes, sir. So I'm going to pay some taxes today. Well, when it's up in a month or so, right? Yes, sir. So Fidelity does have like an annuity option that has... Honey, what did I just tell you for the last five minutes? No more annuities.

Starting point is 01:54:35 That was the takeaway. No, trust me. I get it. Yeah, I get it. Okay. Then why did you just ask me about an annuity? No, you don't need to do an annuity. I would not do that.

Starting point is 01:54:45 You do whatever you want to do, honey, but I wouldn't do it. So check out Ramsey Solutions.com. Click on a SmartVestor Pro. Sit down with them. I personally use a SmartVestor Pro to help me with issues like this to try to make sure my brain's working. Jade and Sam do the same thing as Dave and Sharon as Rachel and Winston as George and Whitney. Everybody here on the show, John and Sheila, we all use professional help like that. And we do this for a living. Why does he think he wants an annuity? What are they saying out in the market that is making people go, yep, I'm going to do that because I hear all, I can look at it and say, this is a terrible idea, but how is it being marketed that people aren't realizing that it's

Starting point is 01:55:25 a terrible idea? What are they saying? Well, I don't know what he's hearing, but what, what's, how's it being marketed? An annuity, and a variable annuity has a couple of functions that if you're, if you're a first time investor and you're scared, they give you some comfort. Okay. If you put money in a variable annuity, it's mutual funds inside of an annuity. Right. And you can pick the mutual funds inside the annuity. So you can pick good ones, and he has done pretty good probably. All right.

Starting point is 01:55:55 And the problem is it grows at ordinary income tax rates, not at capital gains tax rate. But they will give you a guarantee of two things. One is that if you put 750 in, if you leave it alone seven years, will guarantee you 750,000 principle. You will not lose your principle. lose. So there it is. Okay. And we'll also guarantee you a 5% rate of return. Which is poo-poo. Exactly. Because then you can probably make almost three times that, two times that anyway. So I'd rather take the low interest rate and know that I'm not going to have a loss. No, it's a guarantee of a low interest rate. You don't necessarily, if the bottom line is these

Starting point is 01:56:34 guarantees are both worthless because the market, if you pick mutual, decent mutual funds, is going to far outperform either one of those guarantees. So they're not going to activate. Right? That person doesn't know that. And so they're just got this in the back of their mind that I can do this and I can, I can, I've got a guarantee. At least I got a guarantee. And I'm not going to lose my principle because everybody knows you lose all your money in the stock market. Right. And all this bull crap, right? But, you know, in 2023, it went up 26 percent. In 2024, it went up 25 percent. In 25, it went up 18 percent. And so far in 26, it's up almost 13 percent. So they're selling you a sense of security you never needed. It'd have to really suck going forward for you to be back down to your original principal and only getting five. Yep, yep. Hey, what's up, guys? It's Jade Warshot. Listen, summer spending adds up so fast between vacations and road trips and camp fees and events.

Starting point is 01:57:58 And all the extra gas and grocery runs, money can get tight before you know it. To really get your money under control and keep it that way, you're going to need a plan. And that's what you'll get with the every dollar budget app. It helps you track your spending, free up cash to put toward debt, savings and it's the simplest way to make a plan for your money before the month begins. So no more wondering where your money's going. You're telling it where to go. Download every dollar in the app store or Google Play and start for free today. Our scripture of the day, Isaiah 30 and 21, whether you turn to the right of the left,

Starting point is 01:58:39 your ears will hear a voice behind you saying, this is the way, walk in it. Dolly Parton said, if you don't like the road you're walking, start paving another one. We today, depending on when you're hearing this, I don't know, but today we learned that we, the dolly's in the arms of Jesus at 80 years old. She was an absolute treasure. And we talked about her in the first segment as we came on the air today. But, yeah, all of Nashville and Tennessee for sure is grieving. I'll tell you something else about her.

Starting point is 01:59:14 I didn't mention in that first segment. almost regardless of who you talk about in the music business, the acting business, the business you and I are in, podcasting or whatever else, almost everyone that has gotten some notoriety has a lot of fans. But there's almost always someone that's got something to say, well, I was at the restaurant one time. Oh, something negative. Something negative. You never heard a negative word on her, ever. No.

Starting point is 01:59:44 And in this town of Nashville, a bunch of gossips, that's weird. I mean, she was golden. Yeah. Never heard anybody say anything negative. I mean, it didn't take about 30 seconds finding somebody say something negative about me. Right. They're everywhere, you know. But I've never heard anybody say anything negative about her.

Starting point is 02:00:05 And if they did, they discredited themselves instantaneously, you know, but never in my presence. I've never, I've heard people say something. I've got a lot of good friends in that music business, all that. They'll say, man, so and so and so and so. Well, yeah, but he does this and this and this. Yeah, well, okay, but you didn't. So, but not Dolly, not Miss Dolly. Wow.

Starting point is 02:00:27 Absolutely incredible human being. All right, Alex is in Las Vegas, Nevada. Hi, Alex, how are you? Hi, I'm well. How are you? Better than I deserve. What's up? My question was, should I file bankruptcy?

Starting point is 02:00:42 What's going on, kiddo? Sorry, I didn't want to get emotional. That's okay. It's scary. So I'm 31. I have five kids. For the past, I would say, for the past three years, I've been in like a custody battle with one of the, one of the fathers of my children. So I've had to take out loans. And recently I did, I had to take out a title loan on my car to give my attorney like the final payment.

Starting point is 02:01:25 And I also had to take out a payday loan as well. Did you win? And so I don't know yet. So the judge is going to do a written decision. But my attorney is pretty confident that the, you know, the other person had no. case and basically said we have nothing to worry about, just wait for the judge to do the written decision. However, like getting up to this point has cost me like thousands and thousands and thousands of dollars. Yeah, I heard that. What I was trying to figure out is that the bleeding was over,

Starting point is 02:01:54 and it sounds like it's over. Okay. So, but the patient is wounded, eh? So, okay. So, um, so how much is the payday lender rip off? So the, the payday loan that I took out was for like $600. So every time. Okay. I got $50,000. I know, I know. They're awful.

Starting point is 02:02:15 And so, and the title loan on the car was how much? $3,500. Okay. And what other debt do you have? So I have about like total. I have $68,000 in debt. I have a repossession from like 2023. What's the balance on that?

Starting point is 02:02:36 So that's $11,000. Okay. And what's the rest of the $68? school loans, $25,000 and I'm still in college. And then I owe my old attorney $14,000. Okay. And then I owe the IRS close to like $7,000. Okay.

Starting point is 02:02:59 All right. And what do you make? And then a credit card debt I have about $900. And what do you make? $50,000. Doing what? I'm a medical billing and coding specialist. And how old are the five kids?

Starting point is 02:03:17 So 15, almost 16, and then 13, 10, 7, and 2. Okay. All right. Are you plugged into a good church there in Las Vegas? Yes, I am. Okay. Have you talked to your pastor and the counseling team about your situation? No.

Starting point is 02:03:39 No, you have not. No, you've not. you need to today. Okay. It's their, it's their obligation to help you. It's what they live for. They're going to want to help you. You have five kids and you're on a shoestring budget, okay? And they can. So let's kind of go back to your original question and then let's walk you forward out of that. So first thing we're going to do is get some people around you. The second thing I want to do is get them to help you a little bit with some of this. I don't expect them to pay it all off or anything and you don't either. Okay. student loans and IRS are not bankruptible.

Starting point is 02:04:15 Repo is not collecting today. And the, what was the $14,000 again? My previous attorney. Oh, that's an old attorney. He's not collecting today either. He's waiting because he knows you're broke. Probably be surprised when you pay. Credit cards, you're probably not been paying on them

Starting point is 02:04:38 because you've been dumping everything into this child case. So really the two that are the most pressing are the $600 and the $3,500, agreed? Yes. Yeah. Because you're really not doing much with the rest of it. So what I would recommend is not paying anyone and clearing the title loan as soon as possible. And if the church can help you with that sum, I think that would be awesome.

Starting point is 02:05:02 And get your car back because you're going to need that. And then we'll argue about what we're going to do is settling with. the payday lender that screwed you, but you walked in there and asked for it. And I understand why, but you still did. And so you got to clear that little 600 up before it becomes 1,820 minutes. Right, right, right. And then we'll begin to work through the rest of this. Here's the neat thing.

Starting point is 02:05:32 The student loan's just sitting there on hardship deferral. Just call and put it on hardship deferral. I'm not paying anything right now. Besides that, you're in school, you said. What are you doing in school? I'm getting my bachelor's and associates of science and human resources. Okay. When will it be done?

Starting point is 02:05:49 In two years. Are you continuing to go into debt for this? Yes. Okay. We've got to stop that. Yeah. We have to clean up this mess. All of those things in your rearview mirror are, all those monsters are chasing you down the road.

Starting point is 02:06:06 And they're destabilizing you emotionally. They're destabilizing your whole household. and everything else. Okay. So for right now, we got to put school on hold until we can pay for it, unless they want to extend you some kind of help as a single mom with five kids. And they might if you went into the counseling office there. If they'll give you a free semester or something, then you can stay in. But otherwise, you've got to put it on hold. Otherwise, you're going to have $50,000 or $60,000 of student loan debt when you're done. You've got to stop this. And you can't just keep piling this up and then get out. And bankruptcy doesn't

Starting point is 02:06:40 fix this because most of it's not bankrupt. You got IRS. You got student loans. That's the major pieces of this. Yeah. I mean, you can settle this repo for like two or three grand. It'll go away when you can scrape up some money later. So order of attack is this. Here's your order. Here's what I want you to do. First call is when you get off of here, I want you to call your pastor. I want you go sit down and show them your budget, show them your situation, tell them you talk to us on the air and that I said, I think you that they will give you some help. And they probably will if it's a decent-sized church, okay? And if they could clear up, help you clear up that car, that'd be great, or part of it, that'd be great. And even better would be the car and the payday lender.

Starting point is 02:07:19 And then let's just start trying to get current, let's get the IRS gone, let's get the attorney gone, you know, let's just start develop an order of attack down through these things, and stop borrowing money on school until you get this mess cleaned up, and then you pay cash for school as you go, and don't go further and further and further. into that. And, you know, it's, this is not going to be a quick fix, but the problem is you've been getting killed here, death by a thousand cuts. And so we've got to heal one cut at a time.

Starting point is 02:07:51 And it's going to take a minute. Now take a little bit, a little bit of work and a little bit of help. We'll help you on our end. We'll put you into, sit you with one of our coaches. I'm going to give you one of our coaches for free. Christian will take care of that to coach you in person. And we won't charge you a dime. and we're going to put you into entree leadership and make sure you're okay.

Starting point is 02:08:11 Entree leadership, put you into every dollar and make sure you're okay. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus.

The Ramsey Show - Quit Paying for Yesterday's Mistakes

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